UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
☑ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended: September 30, 2017
OR
☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Transition Period From to
Commission File Number: 1-1063
Dana Incorporated
(Exact name of registrant as specified in its charter)
Delaware | 26-1531856 | |||
(State of incorporation) | (IRS Employer Identification Number) | |||
3939 Technology Drive, Maumee, OH | 43537 | |||
(Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Common stock $0.01 par value | DAN | New York Stock Exchange | ||
(Title of each class) | (Trading Symbol) | (Name of exchange on which registered) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company,”" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☑ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||
Emerging growth company | ☐ | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
There were 144,870,955144,963,217 shares of the registrant’s common stock outstanding at October 20, 2017.April 17, 2024.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017
TABLE OF CONTENTS
10-Q Pages | |||
Item 1 | |||
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3 | |||
Item 4 | |||
Item 1 | |||
Item 1A | |||
Item 2 | |||
| Item | |||
Item | |||
ITEM 1. FINANCIAL STATEMENTS
Dana Incorporated
Consolidated Statement of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended | ||||||||
March 31, | ||||||||
2024 | 2023 | |||||||
Net sales | $ | 2,735 | $ | 2,644 | ||||
Costs and expenses | ||||||||
Cost of sales | 2,491 | 2,415 | ||||||
Selling, general and administrative expenses | 139 | 140 | ||||||
Amortization of intangibles | 3 | 3 | ||||||
Restructuring charges, net | 5 | 1 | ||||||
Loss on disposal group held for sale | (29 | ) | ||||||
Other income (expense), net | 2 | 5 | ||||||
Earnings before interest and income taxes | 70 | 90 | ||||||
Interest income | 4 | 4 | ||||||
Interest expense | 39 | 34 | ||||||
Earnings before income taxes | 35 | 60 | ||||||
Income tax expense | 37 | 30 | ||||||
Equity in earnings of affiliates | 2 | 1 | ||||||
Net income | — | 31 | ||||||
Less: Noncontrolling interests net income | 5 | 4 | ||||||
Less: Redeemable noncontrolling interests net loss | (8 | ) | (1 | ) | ||||
Net income attributable to the parent company | $ | 3 | $ | 28 | ||||
Net income per share available to common stockholders | ||||||||
Basic | $ | 0.02 | $ | 0.19 | ||||
Diluted | $ | 0.02 | $ | 0.19 | ||||
Weighted-average common shares outstanding | ||||||||
Basic | 144.8 | 143.9 | ||||||
Diluted | 144.8 | 144.3 | ||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net sales | $ | 1,831 | $ | 1,384 | $ | 5,372 | $ | 4,379 | |||||||
| Costs and expenses | |||||||||||||||
| Cost of sales | 1,562 | 1,176 | 4,564 | 3,739 | |||||||||||
| Selling, general and administrative expenses | 125 | 99 | 379 | 303 | |||||||||||
| Amortization of intangibles | 4 | 2 | 9 | 6 | |||||||||||
| Restructuring charges, net | 2 | 17 | 14 | 23 | |||||||||||
| Other income (expense), net | 1 | 6 | (8 | ) | 9 | ||||||||||
| Earnings before interest and income taxes | 139 | 96 | 398 | 317 | |||||||||||
| Loss on extinguishment of debt | (13 | ) | (19 | ) | (17 | ) | |||||||||
| Interest income | 3 | 3 | 8 | 8 | |||||||||||
| Interest expense | 25 | 27 | 79 | 84 | |||||||||||
| Earnings before income taxes | 104 | 72 | 308 | 224 | |||||||||||
| Income tax expense | 33 | 13 | 94 | 66 | |||||||||||
| Equity in earnings of affiliates | 2 | 2 | 12 | 6 | |||||||||||
| Net income | 73 | 61 | 226 | 164 | |||||||||||
| Less: Noncontrolling interests net income | 3 | 4 | 13 | 9 | |||||||||||
| Less: Redeemable noncontrolling interests net income (loss) | 1 | (2 | ) | ||||||||||||
| Net income attributable to the parent company | $ | 69 | $ | 57 | $ | 215 | $ | 155 | |||||||
| Net income per share available to common stockholders | |||||||||||||||
| Basic | $ | 0.47 | $ | 0.40 | $ | 1.46 | $ | 1.06 | |||||||
| Diluted | $ | 0.46 | $ | 0.39 | $ | 1.45 | $ | 1.05 | |||||||
| Weighted-average common shares outstanding | |||||||||||||||
| Basic | 145.0 | 144.0 | 144.8 | 146.7 | |||||||||||
| Diluted | 146.9 | 144.6 | 146.5 | 147.1 | |||||||||||
| Cash dividends declared per share | $ | 0.06 | $ | 0.06 | $ | 0.18 | $ | 0.18 | |||||||
The accompanying notes are an integral part of the consolidated financial statements.
Consolidated Statement of Comprehensive Income (Unaudited) (In millions) Three Months Ended March 31, 2024 2023 Net income Other comprehensive income (loss), net of tax: Currency translation adjustments Hedging gains and losses Defined benefit plans Other comprehensive income (loss) Total comprehensive income (loss) Less: Comprehensive income attributable to noncontrolling interests Less: Comprehensive loss attributable to redeemable noncontrolling interests Comprehensive income (loss) attributable to the parent company The accompanying notes are an integral part of the consolidated financial statements. Consolidated Balance Sheet (Unaudited) (In millions, except share and per share amounts) March 31, December 31, 2024 2023 Assets Current assets Cash and cash equivalents Accounts receivable Trade, less allowance for doubtful accounts of $14 in 2024 and $16 in 2023 Other Inventories Other current assets Current assets of disposal group held for sale Total current assets Goodwill Intangibles Deferred tax assets Other noncurrent assets Investments in affiliates Operating lease assets Property, plant and equipment, net Total assets Liabilities, redeemable noncontrolling interests and equity Current liabilities Short-term debt Current portion of long-term debt Accounts payable Accrued payroll and employee benefits Taxes on income Current portion of operating lease liabilities Other accrued liabilities Current liabilities of disposal group held for sale Total current liabilities Long-term debt, less debt issuance costs of $23 in 2024 and $24 in 2023 Noncurrent operating lease liabilities Pension and postretirement obligations Other noncurrent liabilities Noncurrent liabilities of disposal group held for sale Total liabilities Commitments and contingencies (Note 13) Redeemable noncontrolling interests Parent company stockholders' equity Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding Common stock, 450,000,000 shares authorized, $0.01 par value, 144,954,645 and 144,386,484 shares outstanding Additional paid-in capital Retained earnings Treasury stock, at cost (821,207 and 474,981 shares) Accumulated other comprehensive loss Total parent company stockholders' equity Noncontrolling interests Total equity Total liabilities, redeemable noncontrolling interests and equity The accompanying notes are an integral part of the consolidated financial statements. Consolidated Statement of Cash Flows (Unaudited) (In millions) Three Months Ended March 31, 2024 2023 Operating activities Net income Depreciation Amortization Amortization of deferred financing charges Earnings of affiliates, net of dividends received Stock compensation expense Deferred income taxes Pension expense, net Change in working capital Loss on disposal group held for sale Other, net Net cash used in operating activities Investing activities Purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Settlements of undesignated derivatives Other, net Net cash used in investing activities Financing activities Net change in short-term debt Repayment of long-term debt Deferred financing payments Dividends paid to common stockholders Distributions to noncontrolling interests Collection of note receivable from noncontrolling interest Contributions from redeemable noncontrolling interests Other, net Net cash provided by financing activities Net decrease in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash – beginning of period Effect of exchange rate changes on cash balances Cash, cash equivalents and restricted cash – end of period (Note 5) Non-cash investing activity Purchases of property, plant and equipment held in accounts payable The accompanying notes are an integral part of the consolidated financial statements. Index to Notes to Consolidated Financial Statements 1. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. Notes to Consolidated Financial Statements (Unaudited) (In millions, except share and per share amounts) General Dana Incorporated (Dana) is headquartered in Maumee, Ohio and was incorporated in Delaware in 2007. The terms "Dana," "we," "our" and "us," when used in this report, are references to Dana. These references include the subsidiaries of Dana unless otherwise indicated or the context requires otherwise. Summary of significant accounting policies Basis of presentation Recently adopted accounting pronouncements We did not adopt any new accounting pronouncements during the three months ended March 31, 2024. Recently issued accounting pronouncements We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements. In In In February 2024, we Accounts receivable - Trade Changes in the carrying amount of goodwill by segment Off-Highway Balance, December 31, 2023 Reclassified to disposal group held for sale Currency impact Balance, March 31, 2024 Components of other intangible assets March 31, 2024 December 31, 2023 Weighted Average Useful Life (years) Gross Carrying Amount Accumulated Impairment and Amortization Net Carrying Amount Gross Carrying Amount Accumulated Impairment and Amortization Net Carrying Amount Amortizable intangible assets Core technology Trademarks and trade names Customer relationships Non-amortizable intangible assets Trademarks and trade names Net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating March 31, 2024 Light Vehicle Commercial Vehicle Off-Highway Power Technologies Amortization expense related to amortizable intangible assets Three Months Ended March 31, 2024 2023 Charged to cost of sales Charged to amortization of intangibles Total amortization Our restructuring activities have historically included rationalizing our operating footprint by consolidating facilities, positioning operations in lower cost locations, and reducing overhead costs. Accrued restructuring costs and activity Employee Termination Benefits Exit Costs Total Balance, December 31, 2023 Charges to restructuring Cash payments Balance, March 31, 2024 At Note 5. Supplemental Balance Sheet and Cash Flow Information Supplier finance programs — As of March 31, 2024 and December 31, 2023, we had $74 and $69, respectively, of confirmed obligations subject to Inventory components — March 31, 2024 December 31, 2023 Raw materials Work in process and finished goods Total Cash, cash equivalents and March 31, 2024 December 31, 2023 March 31, 2023 December 31, 2022 Cash and cash equivalents Restricted cash included in other current assets Restricted cash included in other noncurrent assets Total cash, cash equivalents and restricted cash Common stock Changes in equity 2024 Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Non-controlling Interests Total Equity Balance, December 31, 2023 Net income Other comprehensive loss Common stock dividends and dividend equivalents Distributions to noncontrolling interests Redeemable noncontrolling interest adjustment to redemption value Stock compensation Stock withheld for employee taxes Balance, March 31, 2024 2023 Common Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Non-controlling Interests Total Equity Balance, December 31, 2022 Net income Other comprehensive income Common stock dividends and dividend equivalents Distributions to noncontrolling interests Redeemable noncontrolling interest adjustment to redemption value Stock compensation Stock withheld for employee taxes Balance, March 31, 2023 Changes in each component of accumulated other comprehensive income (loss) (AOCI) of the parent Parent Company Stockholders 2024 Foreign Currency Translation Hedging Defined Benefit Plans Accumulated Other Comprehensive Loss Balance, December 31, 2023 Currency translation adjustments Holding gains and losses Reclassification of amount to net income (a) Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b) Tax expense Other comprehensive income (loss) Balance, March 31, 2024 Parent Company Stockholders 2023 Foreign Currency Translation Hedging Defined Benefit Plans Accumulated Other Comprehensive Loss Balance, December 31, 2022 Currency translation adjustments Holding gains and losses Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b) Tax expense Other comprehensive income (loss) Balance, March 31, 2023 (a) (b) See Note 10 for additional details. Hydro-Québec owns a Redeemable noncontrolling interests reflected as of the balance sheet date are the greater of the redeemable noncontrolling interest balances adjusted for comprehensive income (loss) items and distributions or the redemption Reconciliation of changes in redeemable noncontrolling interests Three Months Ended March 31, 2024 2023 Balance, beginning of period Capital contribution from redeemable noncontrolling interests Adjustment to redemption value Comprehensive income (loss) adjustments: Net loss attributable to redeemable noncontrolling interests Other comprehensive income (loss) attributable to redeemable noncontrolling interests Balance, end of period Reconciliation of the numerators and denominators of the earnings per share calculations Three Months Ended March 31, 2024 2023 Net income available to common stockholders - Numerator basic and diluted Denominator: Weighted-average common shares outstanding - Basic Employee compensation-related shares Weighted-average common shares outstanding - Diluted The share count for diluted earnings per share is computed on the basis of the weighted-average number of common shares outstanding plus the effects of dilutive common stock equivalents (CSEs) outstanding during the period. We excluded The Compensation Committee of our Board of Directors approved the grant of RSUs and performance share units (PSUs) shown in the table below during Granted Grant Date (In millions) Fair Value* RSUs PSUs * Weighted-average per share We calculated the fair value of the RSUs at grant date based on the closing market price of our common stock at the date of grant. The number of PSUs that ultimately vest is contingent on achieving specified During 2024, we paid $2 of cash to settle We have a number of defined contribution and defined benefit, qualified and nonqualified, pension plans covering eligible employees. Other postretirement benefits (OPEB), including medical and life insurance, are provided for certain employees upon retirement. Components of net periodic benefit cost (credit) Pension OPEB 2024 2023 2024 2023 Three Months Ended March 31, U.S. Non-U.S. U.S. Non-U.S. Non-U.S. Non-U.S. Interest cost Expected return on plan assets Service cost Amortization of net actuarial (gain) loss Net periodic benefit cost The service cost components of net periodic pension and OPEB costs are included in cost of sales and selling, general and administrative expenses as part of compensation cost and are eligible for Long-term debt at Interest Rate March 31, 2024 December 31, 2023 Senior Notes due April 15, 2025 5.750% Senior Notes due November 15, 2027 5.375% Senior Notes due June 15, 2028 5.625% Senior Euro Notes due July 15, 2029 3.000% Senior Notes due September 1, 2030 4.250% Senior Euro Notes due July 15, 2031 8.500% Senior Notes due February 15, 2032 4.500% Other indebtedness Debt issuance costs Less: Current portion of long-term debt Long-term debt, less debt issuance costs * In conjunction with the issuance of the April 2025 Notes, we entered into Interest on the senior notes is payable Senior notes activity — On Senior notes redemption Redemption Price April November June July September July February Year 2025 Notes 2027 Notes 2028 Notes 2029 Notes 2030 Notes 2031 Notes 2032 Notes 2023 2024 2025 2026 2027 2028 2029 2030 2031 At any time prior to At any time prior to May 1, 2024, we may redeem up to 40% of the aggregate principal amount of the September 2030 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 104.250% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, provided that at least 50% of the aggregate principal amount of the September 2030 Notes remains outstanding after the redemption. Prior to May 1, 2026, we may redeem some or all of the At any time prior to July 15, 2026, we may redeem up to 40% of the aggregate principal amount of the July 2031 Notes in an amount not to exceed the At any time prior to February Credit agreement The Advances under Margin Total Net Leverage Ratio Base Rate SOFR Rate Less than or equal to 1.00:1.00 Greater than 1.00:1.00 but less than or equal to 2.00:1.00 Greater than 2.00:1.00 Commitment fees are applied based on the average daily unused portion of the available amounts under the Revolving Facility as set forth below: Total Net Leverage Ratio Commitment Fee Less than or equal to 1.00:1.00 Greater than 1.00:1.00 but less than or equal to 2.00:1.00 Greater than 2.00:1.00 Up to At March 31, 2024, we had Debt covenants In measuring the fair value of our assets and liabilities, we use market data or assumptions that we believe market participants would use in pricing an asset or liability including assumptions about risk when appropriate. Our valuation techniques include a combination of observable and unobservable inputs. Fair value measurements on a recurring basis Fair Value Category Balance Sheet Location Fair Value Level Currency forward contracts Cash flow hedges Accounts receivable - Other Cash flow hedges Other accrued liabilities Undesignated Accounts receivable - Other Undesignated Other accrued liabilities Currency swaps Cash flow hedges Other noncurrent assets Cash flow hedges Other noncurrent liabilities Undesignated Other noncurrent liabilities Fair Value Level Fair value of financial instruments March 31, 2024 December 31, 2023 Fair Value Level Carrying Value Fair Value Carrying Value Fair Value Long-term debt Foreign currency derivatives We have executed fixed-to-fixed cross-currency swaps in conjunction with the issuance of The following fixed-to-fixed cross-currency swaps were outstanding at Underlying Financial Instrument Derivative Financial Instrument Description Type Face Amount Rate Traded Amount Inflow Rate Outflow Rate April 2025 Notes Payable Luxembourg Intercompany Notes Receivable Luxembourg Intercompany Notes Receivable Undesignated 2026 Swap Undesignated Offset 2026 Swap The designated swaps are expected to be highly effective in offsetting the corresponding currency-based changes in cash outflows related to the underlying designated financial instruments. Based on our qualitative assessment that the critical terms of The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was The following currency derivatives were outstanding at Notional Amount (U.S. Dollar Equivalent) Functional Currency Traded Currency Designated Undesignated Total Maturity U.S. dollar Mexican peso, Thai baht, Indian rupee Mar-2025 Euro U.S. dollar, Australian dollar, Swiss franc, Chinese renminbi, British pound, Hungarian forint, Indian rupee, Mexican peso, Norwegian krone, Swedish krona, South African rand Sep-2027 British pound U.S. dollar, euro Dec-2024 South African rand U.S. dollar, euro, Thai baht May-2024 Thai baht U.S. dollar Apr-2024 Canadian dollar U.S. dollar Oct-2024 Brazilian real U.S. dollar, euro Mar-2025 Indian rupee U.S. dollar, euro, British pound Jun-2025 Chinese renminbi U.S. dollar, euro, Canadian dollar Apr-2024 Mexican peso U.S. dollar Apr-2024 Total forward contracts U.S. dollar euro Nov-2027 Euro U.S. dollar Jun-2026 Total currency swaps Total currency derivatives Designated cash flow hedges — With respect to contracts designated as cash flow hedges, changes in fair value during the period in which the contracts remain outstanding are reported in OCI to the extent such contracts remain effective. Effectiveness is measured by using regression analysis to determine the degree of correlation between the change in the fair value of the derivative instrument and the change in the associated foreign currency exchange rates. Changes in the fair value of contracts not designated as cash flow hedges or as net investment hedges are recognized in The following table provides a summary of deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less: Deferred Gain (Loss) in AOCI March 31, 2024 December 31, 2023 Forward Contracts Cross-Currency Swaps Total The following table provides a summary of the location and amount of gains or losses recognized in the consolidated statement of operations associated with cash flow hedging relationships: Three Months Ended March 31, Derivatives Designated as Cash Flow Hedges 2024 2023 Total amounts of income and expense line items presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded Net sales Cost of sales Other income (expense), net (Gain) or loss on cash flow hedging relationships Foreign currency forwards Amount of (gain) loss reclassified from AOCI into income Cost of sales Other income (expense), net Cross-currency swaps Amount of (gain) loss reclassified from AOCI into income Other income (expense), net The amounts reclassified from AOCI into income for the cross-currency swaps represent an offset to a foreign exchange loss on our foreign currency-denominated intercompany and external debt instruments. Certain of our hedges of forecasted transactions have not formally been designated as cash flow hedges. As undesignated forward contracts, the changes in the fair value of such contracts are included in earnings for the duration of the outstanding forward contract. Any realized gain or loss on the settlement of such contracts is recognized in the same period and in the same line item in the consolidated statement of operations as the underlying transaction. The following table provides a summary of the location and amount of gains or losses recognized in the consolidated statement of operations associated with undesignated hedging relationships. Three Months Ended March 31, Derivatives Not Designated as Hedging Instruments 2024 2023 Gain (loss) recognized in income Foreign currency forward contracts Cost of sales Other income (expense), net Net investment hedges Environmental liabilities Guarantee of lease obligations Other legal matters We record a liability for estimated warranty obligations at the dates our products are sold. We record the liability based on our estimate of costs to settle future claims. Adjustments to our estimated costs at time of sale are made as claim experience and other new information becomes available. Obligations for service campaigns and other occurrences are recognized as adjustments to prior estimates when the obligation is probable and can be reasonably estimated. Changes in warranty liabilities Three Months Ended March 31, 2024 2023 Balance, beginning of period Amounts accrued for current period sales Adjustments of prior estimates Settlements of warranty claims Currency impact Balance, end of period We estimate the effective tax rate expected to be applicable for the full fiscal year and use that rate to provide for income taxes in interim reporting periods. We also recognize the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. We have generally not recognized tax benefits on losses generated in several entities where the recent history of operating losses does not allow us to satisfy the “more likely than not” criterion for the recognition of deferred tax assets. Consequently, there is no income tax expense or benefit recognized on the pre-tax income or losses in these jurisdictions as valuation allowances are adjusted to offset the associated tax expense or benefit. We record interest and penalties related to uncertain tax positions as a component of income tax expense. Net interest expense for the periods presented herein is not significant. We reported Three Months Ended March 31, 2024 2023 Non-service cost components of pension and OPEB costs Government assistance Foreign exchange gain (loss) Strategic transaction expenses Other, net Other income (expense), net Foreign exchange gains and losses on cross-currency intercompany loan balances that are not of a long-term investment nature are included above. Foreign exchange gains and losses on intercompany loans that are permanently invested are reported in OCI. Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration Note 17. Revenue from Contracts with Customers We generate revenue from selling production parts to original equipment manufacturers (OEMs) and service parts to OEMs and aftermarket customers. While we provide production and service parts to certain OEMs under awarded multi-year programs, these multi-year programs do not contain any commitment to volume by the customer. As such, individual customer releases or purchase orders represent the contract with the customer. Our customer contracts do not provide us with an enforceable right to payment for performance completed to date throughout the contract term. As such, we recognize part sales revenue at the point in time when the parts are shipped, and risk of loss has transferred to the customer. We have elected to continue to include shipping and handling fees billed to customers in revenue, while including costs of shipping and handling in costs of sales. Taxes collected from customers are excluded from revenues and credited directly to obligations to the appropriate government agencies. Payment terms with our We continually seek new business opportunities and at times provide incentives to our customers for new program awards. We evaluate the underlying economics of Certain of our customer contracts include rebate incentives. We estimate expected rebates and accrue the corresponding refund liability, as a reduction of revenue, at the time covered product is sold to the customer based on anticipated customer purchases during the rebate period and contractual rebate percentages. Refund liabilities are included in other accrued liabilities on our consolidated balance sheets. We provide standard fitness for use warranties on the products we sell, accruing for estimated costs related to product warranty obligations at time of sale. See Note Contract liabilities are primarily comprised of cash deposits made by customers with cash in advance payment terms. Generally, our contract liabilities turn over frequently given our relatively short production cycles. Contract liabilities were $57 and $50 at March 31, 2024 and December 31,2023. Contract liabilities are included in other accrued liabilities on our Disaggregation of The following table disaggregates revenue for each of Three Months Ended March 31, 2024 2023 Light Vehicle North America Europe South America Asia Pacific Total Commercial Vehicle North America Europe South America Asia Pacific Total Off-Highway North America Europe South America Asia Pacific Total Power Technologies North America Europe South America Asia Pacific Total Total North America Europe South America Asia Pacific Total We are a global provider of Dana evaluates the performance of its operating segments based on external sales and segment EBITDA. Segment EBITDA is a primary driver of cash flows from operations and a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. Our segments are charged for corporate and other shared administrative costs. Segment EBITDA may not be comparable to similarly titled measures reported by other companies. Segment information 2024 2023 Three Months Ended March 31, External Sales Inter-Segment Sales Segment EBITDA External Sales Inter-Segment Sales Segment EBITDA Light Vehicle Commercial Vehicle Off-Highway Power Technologies Eliminations and other Total Reconciliation of segment EBITDA to consolidated net income Three Months Ended March 31, 2024 2023 Segment EBITDA Corporate expense and other items, net Depreciation Amortization Non-service cost components of pension and OPEB costs Restructuring charges, net Stock compensation expense Strategic transaction expenses Distressed supplier costs Loss on disposal group held for sale Other items Earnings before interest and income taxes Interest income Interest expense Earnings before income taxes Income tax expense Equity in earnings of affiliates Net income We have a number of investments in entities that engage in the manufacture and supply of vehicular parts Equity method investments Ownership Percentage Investment Dongfeng Dana Axle Co., Ltd. ROC-Spicer, Ltd. Axles India Limited Tai Ya Investment (HK) Co., Limited All others as a group Investments in equity affiliates Investments in affiliates carried at cost Investments in affiliates Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes in this report. Forward-Looking Information Statements in this report (or otherwise made by us or on our behalf) that are not entirely historical constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often be identified by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “predicts,” “seeks,” “estimates,” “projects,” “outlook,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing” and similar expressions, variations or negatives of these words. These statements represent the present expectations of Dana Incorporated and its consolidated subsidiaries (Dana) based on our current information and assumptions. Forward-looking statements are inherently subject to risks and uncertainties. Our plans, actions and actual results could differ materially from our present expectations due to a number of factors, including those discussed below and elsewhere in this report and in our other filings with the Securities and Exchange Commission (SEC). All forward-looking statements speak only as of the date made and we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances that may arise after the date of this report. Management Overview Dana, with history dating back to 1904, is headquartered in Maumee, External sales by operating segment for the periods ended Three Months Ended March 31, 2024 2023 % of % of Dollars Total Dollars Total Light Vehicle Commercial Vehicle Off-Highway Power Technologies Total See Note 18 to our consolidated financial statements in Item 1 of Part I for further financial information about our operating segments. Our internet address is www.dana.com. The inclusion of our website address in this report is an inactive textual reference only and is not intended to include or incorporate by reference the information on our website into this report. Operational and Strategic Initiatives Our enterprise strategy Central to our strategy is Driving customer centricity continues to Expanding global markets means utilizing our global capabilities and presence to further penetrate growth Delivering innovative solutions enables us We continue to deliver on our goal to accelerate vehicle electrification The development and implementation of Capital Structure Initiatives In addition to investing in our business, we plan to prioritize a balanced allocation of capital while maintaining a strong balance sheet. Shareholder Financing actions — Our current portfolio of unsecured senior notes is structured such that no more than $459 of senior notes comes due in any calendar year, with no maturities until the second quarter of Other Initiatives Aftermarket opportunities Selective acquisitions — Although transformational opportunities will be considered when strategically and Trends in We Each of our end-markets has unique cyclical dynamics and market drivers. These cycles are impacted by periods of investment where end-user vehicle fleets are refreshed or expanded in reaction to demand usage patterns, regulatory changes, or when the age of vehicles in service reach their Light vehicle markets — Our driveline business Commercial vehicle markets — Our primary business is driveline systems for medium and heavy-duty trucks and busses, including the emerging market for hybrid and electric vehicles. Key regional markets are North America, South America (primarily Brazil) and Asia Pacific. During 2023, production of Off-highway markets— Our off-highway business has a large presence outside of North America, with Argentina has experienced significant inflationary pressures the past few years, contributing to significant devaluation of its currency among other economic challenges. Our Argentine operation supports our Light Vehicle operating segment. Our sales in Argentina for the first three months of 2024 of approximately $45 are 2% of our consolidated sales and our net asset exposure related to Argentina was approximately $56, including $20 of net fixed assets, at March 31, 2024. During the second quarter of 2018, we determined that Argentina's economy met the GAAP definition of a highly inflationary economy. In assessing Argentina's economy as highly inflationary we considered its three-year cumulative inflation rate along with other factors. As a result, effective July 1, 2018, the U.S. dollar is the functional currency for our Argentine operations, rather than the Argentine peso. Beginning July 1, 2018, peso-denominated monetary assets and liabilities are remeasured into U.S. dollars using current Argentine peso exchange rates with resulting translation gains or losses included in results of operations. Nonmonetary assets and Commodity costs Sales, Earnings and Cash Flow Outlook 2024 Outlook 2023 2022 Sales $10,650 - $11,150 Adjusted EBITDA $875 - $975 Net cash provided by operating activities Purchases of property, plant and equipment Free cash flow Adjusted EBITDA and Our 2024 sales outlook is $10,650 to Summary Consolidated Results of Operations Three Months Ended March 31, 2024 2023 Dollars % of Net Sales Dollars % of Net Sales Increase/ (Decrease) Net sales Cost of sales Gross margin Selling, general and administrative expenses Amortization of intangibles Restructuring charges, net Loss on disposal group held for sale Other income (expense), net Earnings before interest and income taxes Interest income Interest expense Earnings before income taxes Income tax expense Equity in earnings of affiliates Net income Less: Noncontrolling interests net income Less: Redeemable noncontrolling interests net loss Net income attributable to the parent company Sales Three Months Ended March 31, Amount of Change Due To 2024 2023 Currency Effects Organic Change North America Europe South America Asia Pacific Total Sales in the The North America organic sales increase of Cost of sales and gross margin — Cost of sales for the Gross margin of Selling, general and administrative expenses (SG&A) Amortization of intangibles Restructuring charges, net — Net restructuring charges were $5 in the Loss on disposal group held for sale— In February 2024, we Other income (expense), net — The following table shows the major components of other income (expense), net. Three Months Ended March 31, 2024 2023 Non-service cost components of pension and OPEB costs Government assistance Foreign exchange gain Strategic transaction expenses Other, net Other income (expense), net Strategic transaction expenses relate primarily to costs incurred in connection with Interest income and interest Income tax expense Equity in earnings of affiliates Segment Results of Operations Light Vehicle Three Months Sales Segment EBITDA Segment EBITDA Margin 2023 Volume and mix Performance Currency effects 2024 Light Vehicle sales Light Vehicle first-quarter segment EBITDA increased by $18 compared to the prior year. Higher sales volumes increased year-over-year earnings by $28 (25% incremental margin). The Commercial Vehicle Three Months Sales Segment EBITDA Segment EBITDA Margin 2023 Volume and mix Performance Currency effects 2024 Commercial Vehicle Commercial Vehicle first-quarter segment EBITDA was flat compared to the prior year. Lower sales volumes decreased year-over-year earnings by $16 (178% decremental margin) with product mix significantly impacting margins. The year-over-year performance-related earnings increase was driven by lower spending on electrification initiatives of Off-Highway Three Months Sales Segment EBITDA Segment EBITDA Margin 2023 Volume and mix Performance Currency effects 2024 Off-Highway sales in the first quarter of Off-Highway first-quarter segment EBITDA Power Technologies Three Months Sales Segment EBITDA Segment EBITDA Margin 2023 Volume and mix Performance Currency effects 2024 Power Technologies primarily serves the Power Technologies first-quarter segment EBITDA Non-GAAP Financial Measures Adjusted EBITDA We have defined adjusted EBITDA as net income (loss) before interest, income taxes, depreciation, amortization, equity grant expense, restructuring expense, non-service cost components of pension and other postretirement benefits (OPEB) costs and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment, etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for earnings (loss) before income taxes, net income (loss) or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. The following table provides a reconciliation of net income to adjusted EBITDA. Three Months Ended March 31, 2024 2023 Net income Equity in earnings of affiliates Income tax expense Earnings before income taxes Depreciation and amortization Restructuring charges, net Interest expense, net Distressed supplier costs Loss on disposal group held for sale Other* Adjusted EBITDA Other includes stock compensation expense, non-service cost components of pension and OPEB costs, strategic transaction expenses Free Cash Flow We have defined free cash flow as cash provided by operating activities less purchases of property, plant and equipment. We believe The following table reconciles net cash flows provided by operating activities to free cash flow. Three Months Ended March 31, 2024 2023 Net cash used in operating activities Purchases of property, plant and equipment Free cash flow Liquidity The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at Cash and cash equivalents Less: Deposits supporting obligations Available cash Additional cash availability from Revolving Facility Total liquidity We had availability of $1,126 at March 31, 2024 under our Revolving Facility after deducting $15 of outstanding borrowings and The components of our U.S. Non-U.S. Total Cash and cash equivalents Cash and cash equivalents held at less than wholly-owned subsidiaries Consolidated cash balance A portion of the non-U.S. cash and cash equivalents is utilized for working capital and other operating purposes. Several countries have local regulatory requirements that At From time to time, depending upon market, pricing and other conditions, as well as our cash balances and liquidity, we may seek to acquire our senior notes or other indebtedness The principal sources of liquidity available for our future cash requirements are expected to be (i) cash flows from operations, (ii) cash and cash equivalents on hand and (iii) borrowings from our Revolving Facility. We believe that our overall liquidity and operating cash flow will be sufficient to meet our anticipated cash requirements for capital expenditures, working capital, debt obligations and other commitments during the next twelve months. While uncertainty surrounding the current economic environment could adversely impact our business, based on our current financial position, we believe it is unlikely that any such effects would preclude us from maintaining sufficient liquidity. Cash Flow The following table Three Months Ended March 31, 2024 2023 Cash used for changes in working capital Other cash provided by operations Net cash used in operating activities Net cash used in investing activities Net cash provided by financing activities Net decrease in cash, cash equivalents and restricted cash Operating activities Working capital used cash of Investing activities Financing activities — During Off-Balance Sheet Arrangements There have been no material changes at Contractual Obligations There have been no material changes in Contingencies For a summary of litigation and other contingencies, see Note Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires us to use estimates and make judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosures. There have been no material changes to market risk exposures related to changes in currency exchange rates, interest rates or commodity costs from those discussed in Item 7A of our Disclosure controls and procedures Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Our CEO and CFO have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective. Changes in internal control over financial reporting CEO and CFO certifications We are a party to various pending judicial and administrative proceedings that arose in the ordinary course of business. After reviewing the currently pending lawsuits and proceedings (including the probable outcomes, reasonably anticipated costs and expenses and our established reserves for uninsured liabilities), we do not believe that any liabilities that may result from these proceedings are reasonably likely to have a material adverse effect on our liquidity, financial condition or results of operations. Legal proceedings are also discussed in Note There have been no material changes in our risk factors disclosed in Item 1A of our Issuer's purchases of equity securities — During the Exhibit No. Description 31.1 31.2 32 101 The following materials from Dana Incorporated’s Quarterly Report on Form 10-Q for the quarter ended 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. DANA INCORPORATED Date: April 30, 2024 By: /s/ Timothy R. Kraus Timothy R. Kraus Senior Vice President and Chief Financial Officer $ — $ 31 (20 ) 25 (2 ) 15 1 1 (21 ) 41 (21 ) 72 (4 ) (4 ) 11 $ (14 ) $ 68 Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Net income $ 73 $ 61 $ 226 $ 164 Other comprehensive income (loss), net of tax: Currency translation adjustments (1 ) (8 ) (2 ) (2 ) Hedging gains and losses (14 ) (11 ) (13 ) (21 ) Investment and other gains and losses (5 ) (2 ) Defined benefit plans 19 29 13 Other comprehensive income (loss) 4 (24 ) 14 (12 ) Total comprehensive income 77 37 240 152 Less: Comprehensive income attributable to noncontrolling interests (5 ) (4 ) (18 ) (10 ) Less: Comprehensive income attributable to redeemable noncontrolling interests (1 ) Comprehensive income attributable to the parent company $ 71 $ 33 $ 222 $ 142 $ 351 $ 529 1,526 1,371 251 280 1,625 1,676 287 247 62 4,102 4,103 257 263 169 182 507 516 158 140 123 123 315 327 2,226 2,311 $ 7,857 $ 7,965 $ 39 $ 22 8 35 1,697 1,756 316 288 90 86 41 42 352 373 22 2,565 2,602 2,580 2,598 271 284 318 334 318 319 4 6,056 6,137 197 191 — — 2 2 2,260 2,255 297 317 (13 ) (9 ) (1,007 ) (990 ) 1,539 1,575 65 62 1,604 1,637 $ 7,857 $ 7,965 September 30,
2017 December 31,
2016Assets Current assets Cash and cash equivalents $ 558 $ 707 Marketable securities 38 30 Accounts receivable Trade, less allowance for doubtful accounts of $9 in 2017 and $6 in 2016 1,074 721 Other 176 110 Inventories Raw materials 430 321 Work in process and finished goods 481 317 Other current assets 86 78 Total current assets 2,843 2,284 Goodwill 138 90 Intangibles 177 109 Deferred tax assets 567 588 Other noncurrent assets 68 226 Investments in affiliates 155 150 Property, plant and equipment, net 1,762 1,413 Total assets $ 5,710 $ 4,860 Liabilities and equity Current liabilities Notes payable, including current portion of long-term debt $ 26 $ 69 Accounts payable 1,154 819 Accrued payroll and employee benefits 215 149 Taxes on income 34 15 Other accrued liabilities 224 201 Total current liabilities 1,653 1,253 Long-term debt, less debt issuance costs of $22 in 2017 and $21 in 2016 1,765 1,595 Pension and postretirement obligations 564 565 Other noncurrent liabilities 384 205 Total liabilities 4,366 3,618 Commitments and contingencies (Note 14) Redeemable noncontrolling interests 47 Parent company stockholders' equity Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding — — Common stock, 450,000,000 shares authorized, $0.01 par value, 144,861,213 and 143,938,280 shares outstanding 2 2 Additional paid-in capital 2,348 2,327 Retained earnings 202 195 Treasury stock, at cost (7,001,051 and 6,812,784 shares) (87 ) (83 ) Accumulated other comprehensive loss (1,277 ) (1,284 ) Total parent company stockholders' equity 1,188 1,157 Noncontrolling interests 109 85 Total equity 1,297 1,242 Total liabilities and equity $ 5,710 $ 4,860 $ — $ 31 101 92 5 5 1 1 (2 ) (1 ) 6 6 2 (8 ) (7 ) (251 ) (304 ) 29 14 8 (102 ) (170 ) (70 ) (120 ) 4 2 (1 ) 4 (63 ) (118 ) 17 269 (27 ) (2 ) (2 ) (15 ) (15 ) (3 ) (1 ) 11 9 10 9 (4 ) 1 255 (164 ) (33 ) 563 442 (12 ) 10 $ 387 $ 419 $ 44 $ 72 Nine Months Ended
September 30, 2017 2016 Operating activities Net income $ 226 $ 164 Depreciation 162 129 Amortization of intangibles 10 7 Amortization of deferred financing charges 4 4 Call premium on debt 15 12 Write-off of deferred financing costs 4 5 Earnings of affiliates, net of dividends received 2 3 Stock compensation expense 17 11 Deferred income taxes 10 1 Pension contributions, net (4 ) (12 ) Gain on sale of subsidiary (3 ) Change in working capital (80 ) (142 ) Other, net (2 ) Net cash provided by operating activities 361 182 Investing activities Purchases of property, plant and equipment (251 ) (198 ) Acquisition of businesses, net of cash acquired (184 ) (18 ) Purchases of marketable securities (23 ) (41 ) Proceeds from sales of marketable securities 1 47 Proceeds from maturities of marketable securities 16 33 Proceeds from sale of subsidiary 3 Other (10 ) Net cash used in investing activities (438 ) (187 ) Financing activities Net change in short-term debt (96 ) 14 Proceeds from long-term debt 676 441 Repayment of long-term debt (640 ) (378 ) Call premium on debt (15 ) (12 ) Deferred financing payments (9 ) (10 ) Dividends paid to common stockholders (26 ) (26 ) Distributions to noncontrolling interests (7 ) (16 ) Repurchases of common stock (81 ) Other 4 (4 ) Net cash used in financing activities (113 ) (72 ) Net decrease in cash and cash equivalents (190 ) (77 ) Cash and cash equivalents – beginning of period 707 791 Effect of exchange rate changes on cash balances 41 13 Cash and cash equivalents – end of period $ 558 $ 727 Non-cash investing activity Purchases of property, plant and equipment held in accounts payable $ 113 $ 82 1.2. Disposal Group Held for Sale 2.Acquisitions 3.Disposal Groups4.Goodwill and Other Intangible Assets5.Restructuring of Operations6.Stockholders' Equity7.Redeemable Noncontrolling Interests8.Earnings per Share9.Stock Compensation10.Pension and Postretirement Benefit Plans11.Marketable Securities12.Financing Agreements13.14.15.16.17.18.Segments19. As Dana is a global provider of high technology driveline (axles, driveshafts and transmissions),; sealing and thermal-management products ourproducts; and motors, power inverters, and control systems for electric vehicles with a customer base that includes virtually every major vehicle manufacturer in the global light vehicle, medium/heavy vehicle and off-highway markets.2016Annual Report on Form 10-K.We have added10-K for the subtotal "Earnings before interest and income taxes" to our consolidated statement of operations. Interest income, interest expense and loss on extinguishment of debt are presented below the new subtotal but above the subtotal "Earnings before income taxes." Interest income was previously included in Other income (expense), net. Prioryear ended December 31,2023 (the 2023 Form 10-K). Certain prior year amounts have been reclassified to conform to the 2017current presentation.October 2016, November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-16, Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory,ASU 2023-07, Segment Reporting (Topic 280). The guidance that simplifies the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. GAAP had prohibited the recognition in earnings of current and deferred income taxes for an intra-entity transfer until the asset was sold to an outside party or recovered through use. This amendment simplifies the accounting by requiring entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new guidance, which requires modified retrospective application, becomes effective January 1, 2018 with early adoption permitted in 2017 prior to the issuance of interim financial statements. We adopted this guidance effective January 1, 2017. The adoption of the new guidance resulted in a decrease in Other current assets of $10, a decrease in Other noncurrent assets of $169 and a decrease in Retained earnings at January 1, 2017 of $179.We also adopted the following standards during the first nine months of 2017, none of which had a material impact on our financial statements or financial statement disclosures:StandardEffective Date2016-07Investments – Equity Method and Joint Ventures – Simplifying the Transition to the Equity Method of AccountingJanuary 1, 20172016-06Derivatives and Hedging – Contingent Put and Call Options in Debt InstrumentsJanuary 1, 20172016-05Derivatives and Hedging – Effect of Derivative Contract Novations on Existing Hedge Accounting RelationshipsJanuary 1, 20172015-11Inventory – Simplifying the Measurement of InventoryJanuary 1, 2017Recently issued accounting pronouncementsIn September 2017, the FASB issued ASU 2017-13, Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments, guidance whichdelays the mandatory adoption of ASC 606 and 842 for certain entities, revises the guidance related to performance-based incentive fees in ASC 605 and revises the guidance related to leases in ASC 840 and 842. The revisions to the lease guidance eliminate language specific to certain sale-leaseback arrangements, guarantees of lease residual assets and loans made by lessees to owner-lessors. Also included is an amendment to ASC 842 to retain the guidance in ASC 840 covering the impact of changes in tax rates on investments in leveraged leases. This guidance, which is effective immediately, generally relates to the adoption of ASC 606 and 842 and is not expected to impact our consolidated financial statements.In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging – Targeted Improvements to Accounting for Hedging Activities, guidance that more closely aligns hedge accounting with companies' risk management programs and simplifies its application. More hedging strategies are now eligible for hedge accounting. The new standard permits a qualitative assessment for effectiveness for certain hedges on an ongoing basis after an initial quantitative test to establish that the hedge relationship is highly effective. In addition, if a cash flow hedge is highly effective, all changes in fair value of the derivative hedging instrument will be recorded in other comprehensive income until the hedged item impacts earnings. The standard also provides prescriptive guidance on presentation. The change in fair value of the derivative is presented in the same income statement line item as the earnings effect of the hedged item. Timing of effectiveness assessments and additionalenhances reportable segment disclosure requirements, are also addressed in the standard. This guidance becomes effective January 1, 2019. Early adoption is permitted. We are evaluating the impact this guidance will have on our consolidated financial statements.In July 2017, the FASB issued ASU 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity, Derivatives and Hedging – (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. This guidance is intended to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity. Specifically, a down round feature would no longer cause a freestanding equity-linked financial instrument (or an embedded conversion option) to be considered "not indexed to an entity's own stock" and therefore accounted for as a derivative liability at fair value with changes in fair value recognized in current earnings. Down round features are most often found in warrants and conversion options embedded in debt or preferred equity instruments. In addition, the guidance re-characterized the indefinite deferral of certain provisions on distinguishing liabilities from equity to a scope exception with no accounting effect. This guidance becomes effective January 1, 2019. Early adoption is permitted. We do not presently issue any equity-linked financial instruments and therefore this guidance has no impact on our consolidated financial statements.In May 2017, the FASB issued ASU 2017-09, Stock Compensation – Scope of Modification Accounting, guidance that clarifies that all changes to share-based payment awards are not necessarily accounted for as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. This guidance is effective prospectively beginning January 1, 2018. Early adoption is permitted. This guidance will apply to any future modifications. We do not expect this guidance to have a material impact on our consolidated financial statements.In March 2017, the FASB issued ASU 2017-07, Retirement Benefits – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, guidance that requires entities to present the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the income statement line items where they report compensation cost. Entities will present all other components of net benefit cost outside operating income, if this subtotal is presented.primarily through enhanced disclosures about significant segment expenses. The rules related to the timing of when costs are recognized or how they are measured have not changed. This amendment only impacts where those costs are reflected within the income statement. In addition, only the service cost component will be eligible for capitalization in inventory and other assets. This guidance becomes effective January 1, 2018. Early adoption is permitted. Upon adoption, we expect to classify the nonservice cost components of net periodic pension expense in Other income (expense), net.In January 2017, the FASB issued ASU 2017-04, Goodwill – Simplifying the Test for Goodwill Impairment, guidance that simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 of the goodwill impairment test. The new guidance quantifies goodwill impairment as the amount by which the carrying amount of a reporting unit, including goodwill, exceeds its fair value, with the impairment loss limited to the total amount of goodwill allocated to that reporting unit. This guidance becomes effective for us January 1, 2020 fiscal years beginning after December 15, 2023, and will be applied on a prospective basis. Early adoption is permitted for impairment tests performedinterim periods within fiscal years beginning after January 1, 2017. We do not expect the adoption of this guidance to impact our consolidated financial statements.In January 2017, the FASB issued ASU 2017-01, Business Combinations – Clarifying the Definition of a Business, guidance that revises the definition of a business. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill impairment and consolidation. When substantially all of the fair value of gross assets acquiredis concentrated in a single asset (or a group of similar assets), the asset acquired would not represent a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and a substantive process are present. This guidance becomes effective January 1, 2018. Early adoption is permitted.In November 2016, the FASB released ASU 2016-18, Statement of Cash Flows – Restricted Cash, guidance that addresses the diversity in practice in the classification and presentation of changes in restricted cash on the statement of cash flows. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance becomes effective January 1, 2018 and must be applied on a retrospective basis. This guidance is not expected to have a material impact on our consolidated statement of cash flows.In August 2016, the FASB released ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments, guidance intended to reduce diversity in practice in how certain cash receipts and cash payments are classified in the statement of cash flows. This guidance becomes effective January 1, 2018 and must be applied on a retrospective basis. This guidance is not expected to have a material impact on our consolidated statement of cash flows.In June 2016, the FASB issued ASU 2016-13, Credit Losses – Measurement of Credit Losses on Financial Instruments, new guidance for the accounting for credit losses on certain financial instruments. This guidance introduces a new approach to estimating credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. This guidance, which becomes effective January 1, 2020, is not expected to have a material impact on our consolidated financial statements.In February 2016, the FASB issued ASU 2016-02, Leases, its new lease accounting standard. The primary focus of the standard is on the accounting by lessees. This standard requires lessees to recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease) on the balance sheet. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern in the income statement. Quantitative and qualitative disclosures are required to provide insight into the extent of revenue and expense recognized and expected to be recognized from leasing arrangements. Approximately three-fourths of our global lease portfolio represents leases of real estate, including manufacturing, assembly and office facilities, while the remainder represents leases of personal property, including manufacturing, material handling and IT equipment. Many factors will impact the ultimate measurement of the lease obligation to be recognized upon adoption, including our assessment of the likelihood of renewal of leases that provide such an option. We continue to evaluate the impact this guidance will have on our consolidated financial statements. This guidance becomes effective January 1, 2019 December 15, 2024, with early adoption permitted.January 2016, December 2023, the FASB issued 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities, an amendment that addresses the recognition, measurement, presentation and disclosure of certain financial instruments. Investments in equity securities currently classified as available-for-sale and carried at fair value, with changes in fair value reported in other comprehensive income (OCI), will be carried at fair value determined on an exit price notion and changes in fair value will be reported in net income. The new guidance also affects the assessment of deferred tax assets related2023-09, Improvements to available-for-sale securities, the accounting for liabilities for which the fair value option is elected and the disclosures of financial assets and financial liabilities in the notes to the financial statements.Income Tax Disclosures. This guidance whichrequires disaggregated income tax disclosures on the rate reconciliation and income taxes paid. The guidance becomes effective January 1, 2018, is not expected to have a material impact on our consolidated financial statements.In May 2014, the FASB issued ASU 2014-09, Revenue – Revenue from Contracts for annual periods beginning after December 15, 2024, with Customers, guidance that requires companies to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in amounts that reflect the consideration a company expects to be entitled to in exchange for those goods or services. The new guidance will also require new disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance will be effective January 1, 2018 for Dana. We intend to adopt this standard using the modified retrospective method, recognizing the cumulative effect of initially applying the standard as an adjustment to opening retained earnings.early adoption permitted. We are finalizingcurrently evaluating the assessment of our customer contracts, identifying contractual provisions that may result in a change in the timing or the amount of revenue recognized in comparison with current guidance, as well as assessing the enhanced disclosure requirementsimpact of the new guidance. Under current guidance we generally recognize revenue when products are shipped and risk of loss has transferred to the customer. Under the proposed requirements, the customized nature of some of our products and contractual provisions in certain of our customer contracts that provide us with an enforceable right to payment, may require us to recognize revenue prior to the product being shipped to the customer. We are also assessing pricing provisions contained in certain of our customer contracts. Pricing provisions contained in some of our customer contracts represent variable consideration or may provide the customer with a material right, potentially resulting in a different allocationof the transaction price than under current guidance. We continue to evaluate the impact this guidance will have on our financial statements.statement disclosures.USM – Warren — On March 1, 2017, Disposal Group Held for Saleacquired certain assetsentered into a definitive agreement to sell our European hydraulics business to HPIH S.à r.l. for approximately $40. The sale price is subject to adjustment based on net working capital and liabilities relating to the Warren, Michigan production unit of U.S. Manufacturing Corporation (USM). The production unit acquired is in the business of manufacturing axle housings, extruded tubular products and machined components for the automotive industry. The acquisition will increase Dana's revenue from light and commercial vehicle manufacturers and will vertically integrate a significant element of Dana's supply chain. It also provides Dana with new lightweight product and process technologies.USM contributed certain assets and liabilities relating to its Warren, Michigan production unit to Warren Manufacturing LLC (USM – Warren), a newly created legal entity, and Dana acquired allnet financial position balances as of the company units of USM – Warren. The company units were acquired by Dana free and clear of any liens. We paid $104 at closing including $25 to effectively settle trade payable obligations originating from product purchases Dana made from USM prior to the acquisition, and received$1 in the third quarter for purchase price adjustments determined under the terms of the agreement. The acquisition has been accounted for as a business combination. The purchase consideration and the related allocation to the acquisition date fair values of the assets acquired and liabilities assumed are presented in the following table:Total purchase consideration $ 78 Accounts receivable - Trade 17 Inventories 9 Other current assets 7 Goodwill 5 Intangibles 33 Property, plant and equipment 46 Accounts payable (35 ) Accrued payroll and employee benefits (3 ) Other accrued liabilities (1 ) Total purchase consideration allocation $ 78 Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce and is deductible for tax purposes. Intangibles includes $30 allocated to customer relationships and $3 allocated to developed technology. We used the relief from royalty method, an income approach, to value developed technology. We used the multi-period excess earnings method, an income approach, to value customer relationships. We used a replacement cost method to value fixed assets. The developed technology and customer relationship intangible assets are being amortized on a straight-line basis over eighteen and eleven years, respectively, and property, plant and equipment is being depreciated on a straight-line basis over useful lives ranging from one to twelve years. are reported in our Light Vehicle operating segment from the date of acquisition. We incurred transaction related expenses to complete the acquisition in 2017 totaling $5, which were charged to Other income (expense), net. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no pro forma financial statements are presented. During the first nine months of 2017, the business contributed sales of $69 and net income of $4.BFP and BPT —On February 1, 2017, we acquired 80% ownership interests in Brevini Fluid Power S.p.A. (BFP) and Brevini Power Transmission S.p.A. (BPT) from Brevini Group S.p.A. (Brevini). The acquisition expands our Off-Highway operating segment product portfolio to include technologies for tracked vehicles, doubling our addressable market for off-highway driveline systems and establishing Dana as the only off-highway solutions provider that can manage the power to both move the equipment and perform its critical work functions. This acquisition also brings a platform of technologies that can be leveraged in our light and commercial-vehicle end markets, helping to accelerate our hybridization and electrification initiatives.We paid $181 at closing, using cash on hand, and refinanced a significant portion of the debt assumed in the transaction during the first half of 2017. The purchase price is subject to adjustment upon determination of the net indebtedness and net working capital levels of BFP and BPT as of the closing date. The terms of the agreement provide Dana the right to call half ofBrevini’s noncontrolling interests in BFP and BPT, and Brevini the right to put half of its noncontrolling interests in BFP and BPT to Dana, assuming Dana does not exercise its call right, after the 2017 BFP and BPT financial statements have been approved by the board of directors. Further, Dana has the right to call Brevini’s remaining noncontrolling interests in BFP and BPT, and Brevini the right to put its remaining noncontrolling interests in BFP and BPT to Dana, assuming Dana does not exercise its call right, after the 2019 BFP and BPT financial statements have been approved by the board of directors. The call and put prices are based on the amount Dana paid to acquire its initial 80% interest in BFP and BPT subject to adjustment based on the actual EBITDA and free cash flows, as defined in the agreement, of BFP and BPT. In connection with the acquisition of BFP and BPT, Dana agreed to purchase certain real estate currently being leased by BPT from a Brevini affiliate for €25 by November 1, 2017. The timing of the real estate purchase may extend beyond November 1, 2017, pending the seller obtaining required permits. The purchase consideration and the related allocation to the acquisition date fair values of the assets acquired and liabilities assumed are presented in the following table:Total purchase consideration $ 181 Cash and cash equivalents $ 75 Accounts receivable - Trade 78 Accounts receivable - Other 14 Inventories 137 Other current assets 6 Goodwill 29 Intangibles 41 Deferred tax assets 3 Other noncurrent assets 4 Property, plant and equipment 145 Notes payable, including current portion of long-term debt (131 ) Accounts payable (51 ) Accrued payroll and employee benefits (14 ) Other accrued liabilities (18 ) Long-term debt (51 ) Pension and postretirement obligations (12 ) Other noncurrent liabilities (16 ) Redeemable noncontrolling interest (44 ) Noncontrolling interests (14 ) Total purchase consideration allocation $ 181 The purchase consideration and fair value of the assets acquired and liabilities assumed are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding liabilities assumed and revisions of provisional estimates of fair values, including but not limited to, the completion of independent appraisals and valuations related to property, plant and equipment and intangibles.Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce, is not deductible for tax purposes and will be assigned to and evaluated for impairment at the operating segment level. Intangibles includes $29 allocated to customer relationships and $12 allocated to trademarks and trade names. We used the multi-period excess earnings method, an income approach, to value the customer relationships. We used the relief from royalty method, an income approach, to value customer trademarks and trade names. We used a replacement cost method to value fixed assets. We used a discounted cash flow approach to value the redeemable noncontrolling interests, inclusive of the put and call provisions. We used both discounted cash flow and cost approaches to value the noncontrolling interests. The customer relationships and trademarks and trade names intangible assets are being amortized on a straight-line basis over seventeen years, and property, plant and equipment is being depreciated on a straight-line basis over useful lives ranging from three to fifteen years.The results of operations of the businesses are reported in our Off-Highway operating segment from the date of acquisition. Transaction related expenses in 2017 associated with completion of the acquisition totaling $7 were charged to Other income (expense), net. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no pro forma financial statements are presented. During the first nine months of 2017, the businessescontributed sales of $284 and a net loss of $11, inclusive of a restructuring charge recorded in the second quarter of 2017. See Note 5 for more information.SIFCO —On December 23, 2016, we acquired strategic assets of SIFCO S.A.'s (SIFCO) commercial vehicle steer axle systems and related forged components businesses. The acquisition enables us to enhance our vertically integrated supply chain, which will further improve our cost structure and customer satisfaction by leveraging SIFCO's extensive experience and knowledge of sophisticated forged components. In addition to strengthening our position as a central source for products that use forged and machined parts throughout the region, this acquisition enables us to better accommodate the local content requirements of our customers, which reduces their import and other region-specific costs.SIFCO contributed the strategic assets to SJT Forjaria Ltda., a newly created legal entity, and Dana acquired all of the issued and outstanding quotas of SJT Forjaria Ltda. The strategic assets were acquired by Dana free and clear of any liens, claims or encumbrances. The acquisition was funded using cash on hand and has been accounted for as a business combination. The purchase consideration and the related allocation to the acquisition date fair values of the assets acquired and liabilities assumed are presented in the following table:Purchase price, cash consideration $ 60 Purchase price, deferred consideration 10 Total purchase consideration $ 70 Accounts receivable - Trade $ 1 Accounts receivable - Other 1 Inventories 10 Goodwill 7 Intangibles 3 Property, plant and equipment 59 Accounts payable (2 ) Accrued payroll and employee benefits (9 ) Total purchase consideration allocation $ 70 The purchase consideration and fair value of the assets acquired and liabilities assumed are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding liabilities assumed and revisions of provisional estimates of fair values, including but not limited to, the completion of independent appraisals and valuations related to property, plant and equipment and intangibles. The deferred consideration, less any claims for indemnification made by Dana, is to be paid on December 23, 2017.Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce and is deductible for tax purposes. Intangibles includes $2 allocated to developed technology and $1 allocated to trade names. We used the relief from royalty method, an income approach, to value developed technology and trade names. We used a replacement cost method to value fixed assets. The developed technology and trade name intangible assets are being amortized on a straight-line basis over seven and five years respectively, and property, plant and equipment is being depreciated on a straight-line basis over useful lives ranging from three to ten years.The results of operations of the business are reported in our Commercial Vehicle operating segment from the date of acquisition. As a result of the acquisition, we incurred transaction related expenses totaling $5 during 2016, which were charged to Other income (expense), net. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no pro forma financial statements are presented.Magnum — On January 29, 2016, we acquired the aftermarket distribution business of Magnum® Gaskets (Magnum), a U.S.-based supplier of gaskets and sealing products for automotive and commercial-vehicle applications, for a purchase price of $18 at closing and additional cash payments of up to $2 contingent upon the achievement of certain sales metrics over the two-year period following the acquisition. As of the closing date of the acquisition, the contingent consideration was assigned a fair value of approximately $1. Assets acquired included trademarks and trade names, customer relationships and goodwill. The results of operations of Magnum are reported within our Power TechnologiesOff-Highway operating segment. We acquired Magnum using cash on hand.classified the disposal group as held for sale, recognizing a $29 loss to adjust the carrying value of net assets to fair value less estimated costs to sell. The pro forma effectssale is expected to close during the second quarter of this acquisition would not materially impact our reported results for any period presented,2024. The carrying amounts of the major classes of assets and as a result no pro forma financial statements are presented.Note 3. Disposal GroupsDivestiture of Dana Companies —On December 30, 2016, we completed the divestiture of Dana Companies, LLC (DCLLC), a consolidated wholly-owned limited liability company that was established as partliabilities of our reorganization in 2008 to hold and manage personal injury asbestos claims retained by the reorganized Dana Corporation which was merged into DCLLC. DCLLC had net assets of $165 at the time of sale including cash and cash equivalents, marketable securities and rights to insurance coverage in place to satisfy a significant portion of its liabilities. We received cash proceeds of $88 – $29 net of cash divested – with $3 retained by the purchaser subject to the satisfaction of certain future conditions. We recognized a pre-tax loss of $77 in 2016 upon completion of the transaction. During the second quarter of 2017 the conditions associated with the retained purchase price were satisfied. Dana received the remaining proceeds and recognized $3 of income in Other income (expense), net. Following completion of the sale, Dana has no obligation with respect to current or future asbestos claims.European hydraulics business are as follows: March 31, 2024 $ 17 Accounts receivable - Other 1 Inventories 44 Current assets of disposal group held for sale $ 62 Accounts payable $ 14 Accrued payroll and employee benefits 4 Current portion of operating lease liabilities 1 Other accrued liabilities 3 Current liabilities of disposal group held for sale $ 22 Noncurrent operating lease liabilities $ 1 Pension and postretirement obligations 2 Other noncurrent liabilities 1 Noncurrent liabilities of disposal group held for sale $ 4 Divestiture of Nippon Reinz — On November 30, 2016, we sold our 53.7% interest in Nippon Reinz Co. Ltd. (Nippon Reinz) to Nichias Corporation. Dana received net cash proceeds of $5 and recognized a pre-tax loss of $3 on the divestiture of Nippon Reinz, inclusive of the $12 gain on derecognition of the noncontrolling interest. Nippon Reinz had sales of $42 in 2016 through the transaction date.4.3. Goodwill and Other Intangible AssetsGoodwill — The change in the carrying amount of goodwill in 2017 is primarily due to currency fluctuation and the acquisitions of USM – Warren and 80% interests in BFP and BPT. See Note 2 for additional information. Light Vehicle Commercial Vehicle Off-Highway Power Technologies Total Balance, December 31, 2016 $ — $ 6 $ 78 $ 6 $ 90 Acquisitions 4 39 43 Purchase accounting adjustments 1 1 (10 ) (8 ) Currency impact 13 13 Balance, September 30, 2017 $ 5 $ 7 $ 120 $ 6 $ 138 $ 263 (2 ) (4 ) $ 257 September 30, 2017 December 31, 2016 Amortizable intangible assets Core technology 7 $ 95 $ (88 ) $ 7 $ 88 $ (83 ) $ 5 Trademarks and trade names 15 19 (4 ) 15 6 (2 ) 4 Customer relationships 8 468 (398 ) 70 389 (374 ) 15 Non-amortizable intangible assets Trademarks and trade names 65 65 65 65 Used in research and development activities 20 20 20 20 $ 667 $ (490 ) $ 177 $ 568 $ (459 ) $ 109 The net 8 $ 158 $ (127 ) $ 31 $ 159 $ (126 ) $ 33 13 25 (14 ) 11 29 (15 ) 14 8 492 (437 ) 55 503 (441 ) 62 72 72 73 73 $ 747 $ (578 ) $ 169 $ 764 $ (582 ) $ 182 segments at September 30, 2017 were as follows: Light Vehicle — $53, Commercial Vehicle — $35, Off-Highway — $79 and Power Technologies — $10. $ 13 56 96 4 $ 169 $ 2 $ 2 3 3 $ 5 $ 5 Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Charged to cost of sales $ — $ 1 $ 1 $ 1 Charged to amortization of intangibles 4 2 9 6 Total amortization $ 4 $ 3 $ 10 $ 7 The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for eachTable of the next five years based on September 30, 2017 exchange rates. Actual amounts may differ from these estimates due to such factors as currency translation, customer turnover, impairments, additional intangible asset acquisitions and other events. Remainder of 2017 2018 2019 2020 2021 Amortization expense $ 3 $ 9 $ 8 $ 7 $ 7 5.4. Restructuring of OperationsIn recent years, however, in response to lower demand and other market conditions in certain businesses, our focus has primarily been headcount reduction initiatives to reduce operating costs. Restructuring expense includes costs associated with current and previously announced actions and is comprised of contractual and noncontractual separation costs and exit costs, including costs associated with lease continuation obligations and certain operating costs of facilities that we are in the process of closing.thirdfirst quarter of 2017, we recorded total2024, our restructuring expensecharges were primarily comprised of $2, including $1 of severance and benefitseparation costs for headcount reduction actions in this year's third quarter and $1 of exit costs primarily associated withrelated to the continued execution of previously announced actions.For the nine months ended September 30, 2017, total restructuring expense was $14, including $9 of severance and benefit costs and $5 of exit costs. The severance and benefit costs primarily relate to headcount reduction initiatives in our Off-Highway business, as partrationalization of the BPTglobal administrative and BFP acquisition integration, while the exit costs primarily represents costs associated with the continued execution of previously announced actions.During the third quarter of 2016, we approved plans to implement certain headcount reduction initiatives, primarily infunctional services that support our Off-Highway business. Including costs associated with this actionmanufacturing and with other previously announced initiatives, total restructuring expense during the third quarter of 2016 was $17, including $16 of severanceassembly facilities and benefit costs and $1 of exit costs.For the nine months ended September 30, 2016, total restructuring expense was $23, including $20 of severance and benefit costs and $3 of exit costs. In addition to the third quarter 2016 Off-Highway action described above, total restructuring expense for the nine months ended September 30, 2016 includes the impact of the planned closure of our Commercial Vehicle manufacturing facility in Glasgow, Kentucky and continuing exit costs associated with previously announced actions.including noncurrent portion Total Balance at June 30, 2017 $ 26 $ 6 $ 32 Charges to restructuring 1 1 2 Cash payments (3 ) (1 ) (4 ) Currency impact 1 1 Balance at September 30, 2017 $ 25 $ 6 $ 31 Balance at December 31, 2016 $ 32 $ 6 $ 38 Charges to restructuring 9 5 14 Cash payments (18 ) (5 ) (23 ) Currency impact 2 2 Balance at September 30, 2017 $ 25 $ 6 $ 31 $ 10 $ — $ 10 2 3 5 (2 ) (3 ) (5 ) $ 10 $ — $ 10 September 30, 2017March 31, 2024, the accrued employee termination benefits include costs to reduce approximately 400 300 employees to be completedcompleted over the next year. The exit costs relate primarilylease continuation obligations.Cost to completesupplier finance programs presented as accounts payable within total current liabilities on the consolidated balance sheet. The following table provides project-to-date $ 679 $ 681 946 995 $ 1,625 $ 1,676 estimated future restructuring expenses for completion of our approved restructuring initiatives for our business segments at September 30, 2017. $ 351 $ 529 $ 401 $ 425 25 23 7 7 11 11 11 10 $ 387 $ 563 $ 419 $ 442 Expense Recognized 2017 Light Vehicle $ 10 $ 2 $ 12 $ 1 Commercial Vehicle 41 3 44 13 Off-Highway 6 8 14 Corporate 1 1 Total $ 57 $ 14 $ 71 $ 14 The future cost to complete includes estimated separation costs, primarily those associated with one-time benefit programs, and exit costs through 2021, including lease continuation costs, equipment transfers and other costs which are required to be recognized as closures are finalized or as incurred during the closure.quarterlya cash dividendsdividend of sixten cents per share of common stock in eachthe first quarter of the first three quarters of 2017.2024. Dividends accrue on restricted stock units (RSUs) granted under our stock compensation program and will be paid in cash or additional units when the underlying units vest.Share repurchase program — Our Board $ 2 $ 2,255 $ 317 $ (9 ) $ (990 ) $ 62 $ 1,637 3 5 8 (17 ) (1 ) (18 ) (15 ) (15 ) (1 ) (1 ) (8 ) (8 ) 5 5 (4 ) (4 ) $ 2 $ 2,260 $ 297 $ (13 ) $ (1,007 ) $ 65 $ 1,604 $ 2 $ 2,229 $ 321 $ — $ (1,001 ) $ 52 $ 1,603 28 4 32 40 40 (15 ) (15 ) (1 ) (1 ) (1 ) (1 ) 8 8 (8 ) (8 ) $ 2 $ 2,237 $ 333 $ (8 ) $ (961 ) $ 55 $ 1,658 2017 2016 Three Months Ended September 30, Attributable to Parent Attributable
to Non-
controlling Interests Attributable to Parent Attributable
to Non-
controlling Interests Balance, June 30 $ 1,119 $ 107 $ 1,226 $ 743 $ 95 $ 838 Net income 69 3 72 57 4 61 Other comprehensive income (loss) 2 2 4 (24 ) (24 ) Common stock dividends (9 ) (9 ) (8 ) (8 ) Redeemable noncontrolling interests adjustment to redemption value (1 ) (1 ) — Distributions to noncontrolling interests (2 ) (2 ) (2 ) (2 ) Purchase of noncontrolling interests (1 ) (1 ) — Stock compensation 9 9 5 5 Stock withheld for employee taxes (1 ) (1 ) — Balance, September 30 $ 1,188 $ 109 $ 1,297 $ 773 $ 97 $ 870 Nine Months Ended September 30, Balance, December 31 $ 1,157 $ 85 $ 1,242 $ 728 $ 103 $ 831 (179 ) (179 ) — Net income 215 13 228 155 9 164 Other comprehensive income 7 5 12 (13 ) 1 (12 ) Common stock dividends (26 ) (26 ) (26 ) (26 ) Redeemable noncontrolling interests adjustment to redemption value (3 ) (3 ) — Distributions to noncontrolling interests (7 ) (7 ) (16 ) (16 ) Common stock share repurchases — (81 ) (81 ) Increase from business combination 14 14 — Purchase of noncontrolling interests (1 ) (1 ) — Stock compensation 21 21 11 11 Stock withheld for employee taxes (4 ) (4 ) (1 ) (1 ) Balance, September 30 $ 1,188 $ 109 $ 1,297 $ 773 $ 97 $ 870 See Note 1 for additional information about adoptionTable of new accounting guidance on January 1, 2017.Contents Parent Company Stockholders Foreign Currency Translation Hedging Investments Defined Benefit Plans Total Balance, June 30, 2017 $ (652 ) $ (33 ) $ — $ (594 ) $ (1,279 ) Other comprehensive income (loss): Currency translation adjustments (3 ) (3 ) Holding gains and losses (48 ) (48 ) Reclassification of amount to net income (a) 35 35 Actuarial gain on census update 21 21 Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b) 7 7 Tax expense (1 ) (9 ) (10 ) Other comprehensive income (loss) (3 ) (14 ) — 19 2 Balance, September 30, 2017 $ (655 ) $ (47 ) $ — $ (575 ) $ (1,277 ) Balance, June 30, 2016 $ (603 ) $ (14 ) $ 5 $ (551 ) $ (1,163 ) Other comprehensive income (loss): Currency translation adjustments (8 ) (8 ) Holding gains and losses (17 ) 2 (15 ) Reclassification of amount to net income (a) 6 (7 ) (1 ) Actuarial loss on census update (6 ) (6 ) Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b) 7 7 Tax expense (1 ) (1 ) Other comprehensive loss (8 ) (11 ) (5 ) — (24 ) Balance, September 30, 2016 $ (611 ) $ (25 ) $ — $ (551 ) $ (1,187 ) Parent Company Stockholders Foreign Currency Translation Hedging Investments Defined Benefit Plans Total Balance, December 31, 2016 $ (646 ) $ (34 ) $ — $ (604 ) $ (1,284 ) Other comprehensive income (loss): Currency translation adjustments (1 ) (1 ) Holding loss on net investment hedge (8 ) (8 ) Holding gains and losses (123 ) (123 ) Reclassification of amount to net income (a) 109 109 Actuarial gain on census update 21 21 Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b) 22 22 Tax (expense) benefit 1 (14 ) (13 ) Other comprehensive income (loss) (9 ) (13 ) — 29 7 Balance, September 30, 2017 $ (655 ) $ (47 ) $ — $ (575 ) $ (1,277 ) Balance, December 31, 2015 $ (608 ) $ (4 ) $ 2 $ (564 ) $ (1,174 ) Other comprehensive income (loss): Currency translation adjustments (3 ) (3 ) Holding gains and losses (30 ) 5 (25 ) Reclassification of amount to net income (a) 9 (7 ) 2 Actuarial loss on census update (6 ) (6 ) Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b) 20 20 Tax expense (1 ) (1 ) Other comprehensive income (loss) (3 ) (21 ) (2 ) 13 (13 ) Balance, September 30, 2016 $ (611 ) $ (25 ) $ — $ (551 ) $ (1,187 ) $ (868 ) $ 20 $ (142 ) $ (990 ) (16 ) (16 ) 9 9 (11 ) (11 ) 1 1 — (16 ) (2 ) 1 (17 ) $ (884 ) $ 18 $ (141 ) $ (1,007 ) $ (895 ) $ 21 $ (127 ) $ (1,001 ) 24 24 16 16 1 1 (1 ) (1 ) 24 15 1 40 $ (871 ) $ 36 $ (126 ) $ (961 ) Foreign currency contractRealized gains and investment reclassificationslosses from currency-related forward contracts associated with forecasted transactions or from other derivative instruments treated as cash flow hedges are includedreclassified from AOCI into the same line item in Other income (expense), net.In connection with the acquisition ofcontrolling45% redeemable noncontrolling interest in Brevini Fluid Power S.p.A. (BFP)Dana TM4 Inc., Dana TM4 Electric Holdings BV and Brevini Power Transmission S.p.A. (BPT) from Brevini Group S.p.A. (Brevini) on February 1, 2017, we recognized $45 for Brevini's 20% redeemable noncontrolling interests.Dana TM4 USA, LLC. The terms of the joint venture agreement provide Dana the right to call Brevini's noncontrolling interests in BFP and BPT, and BreviniHydro-Québec with the right to put all, and not less than all, of its noncontrollingownership interests in BFPDana TM4 Inc., Dana TM4 Electric Holdings BV and BPTDana TM4 USA, LLC to Dana assuming Dana does not exercise its call rights, at dates and prices defined in the agreement. The call and put prices are based on the amount Dana paid to acquire its initial ownership interest in BFP and BPT subject to adjustment based on the actual EBITDA and free cash flows, as defined in the agreement, of BFP and BPT. See Note 2 for additional information.values (i.e., the "floor").value. Redeemable noncontrolling interest adjustments of redemption value to the floor are recorded in retained earnings and included as an adjustment to net income available to parent company stockholders inearnings. We estimate the calculationfair value of earnings per share. During the first three quarters of 2017 there was a $3 adjustment to reflect a redemption value in excessusing an income-based approach based on discounted cash flow projections. In determining fair value using discounted cash flow projections, we make significant assumptions and estimates about the extent and timing of carrying value. See Note 8. $ 191 $ 195 9 10 8 1 (8 ) (1 ) (3 ) 1 $ 197 $ 206 September 30, 2017 Balance, beginning of period $ 46 $ — Initial fair value of redeemable noncontrolling interests of acquired business 45 Purchase accounting adjustments (1 ) (1 ) Comprehensive income (loss) adjustments: Net income (loss) attributable to redeemable noncontrolling interests 1 (2 ) Other comprehensive income (loss) attributable to redeemable noncontrolling interests 2 Retained earnings adjustments: Adjustment to redemption value 1 3 Balance, September 30 $ 47 $ 47 Three Months Ended
September 30,Nine Months Ended
September 30, 2017 2016 2017 2016 Net income attributable to the parent company $ 69 $ 57 $ 215 $ 155 (1 ) (3 ) Net income available to common stockholders - Numerator basic and diluted $ 68 $ 57 $ 212 $ 155 Denominator: Weighted-average shares outstanding - Basic 145.0 144.0 144.8 146.7 Employee compensation-related shares, including stock options 1.9 0.6 1.7 0.4 Weighted-average shares outstanding - Diluted 146.9 144.6 146.5 147.1 $ 3 $ 28 144.8 143.9 — 0.4 144.8 144.3 0.12.2 million and 2.10.2 million CSEs from the calculationscalculation of diluted earnings per share for the thirdfirst quarters of 20172024 and 2016 and excluded 0.1 million and 2.1 million CSEs for the year-to-date periods of 2017 and 20162023 as the effect of including them would have been anti-dilutive.2017. RSUs 0.8 $ 19.92 PSUs 0.3 $ 18.63 1.6 $ 13.23 0.7 $ 13.31 return on invested capitalfinancial targets and specified margintotal shareholder return targets with an even distribution betweenrelative to peer companies. For the two targets. Weportion of the award based on financial metrics, we estimated the fair value of the PSUs at grant date based on the closing market price of our common stock at the date of grant adjusted for the value of assumed dividends over the period because the awards are not dividend protected.We received $8 For the portion of cashthe award based on shareholder returns, we estimated the fair value of the PSUs at grant date using various assumptions as part of a Monte Carlo simulation. The expected term represents the period from the exercisegrant date to the end of the three-year performance period. The risk-free interest rate of 4.39% was based on U.S. Treasury constant maturity rates at the grant date. The dividend yield of 2.7% was calculated using our historical approach calculated by dividing the expected annual dividend by the average stock options related to 0.5 million shares. Weprice over the prior year. The estimated volatility of 47.7% was based on observed historical volatility of daily stock returns for the 3-year period preceding the grant date. SARs and RSUs and issued 0.60.9 million shares of common stock based on the vesting of RSUs during 2017.RSUs. We recognized stock$7$6 in both the first quarter of 2024 and $4 during the third quarters of 2017 and 2016 and $17 and $11 during the respective nine-month periods.2023. At September 30, 2017,March 31, 2024, the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $26.$49. This cost is expected to be recognized over a weighted-average period of 1.82.1 years. Pension 2017 2016 OPEB - Non-U.S. Three Months Ended September 30, U.S. Non-U.S. U.S. Non-U.S. 2017 2016 Interest cost $ 13 $ 2 $ 13 $ 2 $ 1 $ 1 Expected return on plan assets (20 ) (1 ) (23 ) (1 ) Service cost 1 2 Amortization of net actuarial loss 5 2 6 1 Net periodic benefit cost (credit) $ (2 ) $ 4 $ (4 ) $ 4 $ 1 $ 1 Nine Months Ended September 30, Interest cost $ 39 $ 6 $ 39 $ 6 $ 3 $ 3 Expected return on plan assets (62 ) (3 ) (69 ) (2 ) Service cost 4 4 Other 1 Amortization of net actuarial loss 17 5 16 4 Net periodic benefit cost (credit) $ (6 ) $ 12 $ (14 ) $ 13 $ 3 $ 3 Pension expense $ 7 $ 3 $ 7 $ 3 $ 1 $ 1 (7 ) (1 ) (8 ) (1 ) 2 1 2 2 (1 ) (1 ) $ 2 $ 4 $ 1 $ 3 $ — $ — 2017 increased versus the same periodcapitalization in 2016 as a result of a lower assumed return on plan assets and an increase in amortization of the net actuarial loss in the U.S.Plan termination — On October 25, 2017, the Dana Board of Directors authorized the company to pursue termination of one of its U.S. defined benefit pension plans. Ultimate plan termination is subject to prevailing market conditionsinventory and other considerations, including interest ratesassets. The non-service components are reported in other income (expense), net and annuity pricing. In the event the company proceeds with effectuating termination, subject to regulatory approval, settlementare not eligible for capitalization.Note 11. Marketable Securities September 30, 2017 December 31, 2016 Cost Unrealized
Gain (Loss) Fair
Value Cost Unrealized
Gain (Loss) Fair
ValueU.S. government securities $ 3 $ — $ 3 $ 2 $ — $ 2 Corporate securities 5 5 2 2 Certificates of deposit 25 25 22 22 Other 5 5 4 4 Total marketable securities $ 38 $ — $ 38 $ 30 $ — $ 30 U.S. government securities include bonds issued by government-sponsored agencies and Treasury notes. Corporate securities are primarily debt securities. Other consists of investments in mutual and index funds. U.S. government securities,corporate debt and certificates of deposit maturing in one year or less, after one year through five years and after five years through ten years total $25, $5 and $3 at September 30, 2017.12.11. Financing Agreements September 30, 2017 December 31, 2016 Interest
Rate Principal Unamortized Debt Issue Costs Principal Unamortized Debt Issue Costs Senior Notes due September 15, 2021 5.375% $ — $ — $ 450 $ (5 ) Senior Notes due September 15, 2023 6.000% 300 (4 ) 300 (4 ) Senior Notes due December 15, 2024 5.500% 425 (5 ) 425 (6 ) Senior Notes due April 15, 2025 5.750% * 400 (6 ) Senior Notes due June 1, 2026 6.500% * 375 (6 ) 375 (6 ) Term Facility 275 (1 ) Other indebtedness 28 120 Total $ 1,803 $ (22 ) $ 1,670 $ (21 ) * $ 200 $ 200 400 400 400 400 351 359 400 400 459 469 350 350 51 79 (23 ) (24 ) 2,588 2,633 8 35 $ 2,580 $ 2,598 *8-year8-year fixed-to-fixed cross-currency swaps which have the effect of economically converting the April 2025 Notes to euro-denominated debt at a fixed rate of 3.850%. See Note 1312 for additional information. In conjunction with the issuance of the June 2026 Notes we entered into 10-year fixed-to-fixed cross-currency swaps which have the effect of economically converting the June 2026 Notes to euro-denominated debt at a fixed rate of 5.140%.semi-annually and interest on the Term Facility is payable quarterly.semi-annually. Other indebtedness includes borrowings from various financial institutions capitaland finance lease obligations, the unamortized fair value adjustment related to a terminated interest rate swap and the financial liability related to build-to-suit leases. See Note 13 for additional information on the terminated interest rate swap.obligations.September 18, 2017, we redeemed the remaining $350 of our September 2021 Notes at a price equal to 102.688% plus accrued and unpaid interest. The $13 loss on extinguishment of debt includes the $10 redemption premium and the $3 write-off of previously deferred financing costs associated with the September 2021 Notes.On April 4, 2017, May 24, 2023, Dana Financing Luxembourg S.à r.l..r.l. (Dana Financing), a wholly-owned subsidiary of Dana, issued $400 completed the sale of €425 ($458 as of May 24, 2023) in senior unsecured notes (April 2025 ( July 2031 Notes) at 5.750%, which8.500%. The July 2031 Notes are fully and unconditionally guaranteed by Dana. The April 2025 July 2031 Notes were issued through a private placement and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act). The April 2025 July 2031 Notes were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and, outside the United States, only to non-U.S. investors in reliance on Regulation S under the Securities Act. The April 2025 July 2031 Notes rank equally with Dana's other unsecured senior notes. Interest on the notes is payable on AprilJanuary 15 and OctoberJuly 15 of each year, beginning on OctoberJanuary 15, 2017. 2024. The April 2025 July 2031 Notes will mature on AprilJuly 15, 2025. 2031. Net proceeds of the offering totaled $394. €419 ($451 as of May 24, 2023). Financing costs of $6 €6 ($7 as of May 24, 2023) were recorded as deferred costs and are being amortized to interest expense over the life of the April 2025 Notes.notes. The proceeds from the offering were used to repay indebtednessredeem $200 of our BPTApril 2025 Notes and BFP subsidiaries, repay indebtedness of a wholly-owned subsidiary in Brazil, redeem $100to make payments against borrowings on our Revolving Facility. On June 9, 2023 we redeemed $200 of our September 2021 Notes and for general corporate purposes. The September 2021 Notes were redeemed on April 4, 20172025 Notes at a price equal to 104.031%100.00% plus accrued and unpaid interest. The $6$1 loss on extinguishment of debt includesis comprised of the $4 redemption premium and the $1 write-off of previously deferred financing costs associated with the September 2021 Notes and the $1April 2025 Notes.premium associated with the repayment of indebtedness of a wholly-owned subsidiary in Brazil. In conjunction with the issuanceprovisions — We may redeem some or all of the April 2025 Notes, we entered into eight-year fixed-to-fixed cross-currency swaps which havesenior notes at the effectfollowing redemption prices (expressed as percentages of economically convertingprincipal amount), plus accrued and unpaid interest to the April 2025 Notes to euro-denominated debt at a fixed rateredemption date, if redeemed during the 12-month period commencing on the anniversary date of 3.850%. See Note 13 for additional information. 100.000 % 101.344 % 102.813 % 100.000 % 100.000 % 101.406 % 101.500 % 100.000 % 100.000 % 100.750 % 100.000 % 100.000 % 100.000 % 102.125 % 104.250 % 100.000 % 100.000 % 101.417 % 102.125 % 102.250 % 100.000 % 100.708 % 100.000 % 101.500 % 100.000 % 100.000 % 100.750 % 100.000 % 100.000 % 100.000 % AprilJuly 15, 2020, 2024, we may redeem up to 35%40% of the aggregate principal amount of the April 2025 July 2029 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 105.750%103.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 50% of the original aggregate principal amount of the April 2025 July 2029 Notes remainsremain outstanding after the redemption.AprilJuly 15, 2020, 2024, we mayalso redeem some or all of the April 2025 July 2029 Notes at a redemption price of 100.000%equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole” premium. We have not separated the make-whole premium from the underlying debt instrument to account for it as a derivativeWe April 2025 September 2030 Notes at a redemption price equal to 100% of the following redemption prices (expressed as percentages ofaggregate principal amount),amount thereof, plus accrued and unpaid interest, if any, to the redemption date if redeemed duringplus a “make-whole” premium. We have not separated the 12-month period commencing on Aprilmake-whole premium from the underlying debt instrument to account for it as a derivative instrument as the economic characteristics and the risks of this embedded derivative are clearly and closely related to the economic characteristics and risks of the underlying debt.years set forth below:Year Redemption Price 2020 104.313% 2021 102.875% 2022 101.438% 2023 100.000% 2024 100.000% On June 23, 2016, we redeemed allamount of our February 2021 Notesproceeds of one or more equity offerings, at a price equal to 103.375%108.500% of the principal amount thereof, plus accrued and unpaid interest. The $16 loss on extinguishmentinterest, if any, to the redemption date, provided that at least 50% of the aggregate principal amount of the July 2031 Notes remain outstanding after the redemption. Prior to July 15, 2026, we may also redeem some or all of the July 2031 Notes at a redemption price equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole” premium. We have not separated the make-whole premium from the underlying debt includesinstrument to account for it as a derivative instrument as the $12 redemption premiumeconomic characteristics and the $4 write-offrisks of previously deferred financing costs associated withthis embedded derivative are clearly and closely related to the economic characteristics and risks of the underlying debt.2021 Notes.August 17, 2017, March 14, 2023, we entered into an amended our credit and guaranty agreement, comprisedextending its maturity to March 14, 2028. We recorded deferred fees of a $275 term facility (the Term Facility) and a $600 revolving credit facility (the Revolving Facility) both of which mature on August 17, 2022. On September 14, 2017, we drew$2 related to the entire amount available under the Term Facility. Net proceeds from the Term Facility draw totaled $274. Financing costs of $1 were recorded asamendment. The deferred cost andfees are being amortized to interest expense over the life of the TermRevolving Facility. We are required to make equal quarterly installments on the last day of each fiscal quarter of 1.5625% of the initial aggregate principal amount of the Term Facility commencing on September 30, 2018. We may prepay some or all of Term Facility without penalty. Any prepayments made on the Term Facility would be applied against the required quarterly installments. The proceeds from the Term Facility were used to repay our September 2021 Notes and for general corporate purposes. The Revolving Facility amended our previous revolving credit facility. In connection with the Revolving Facility, we paid $2 in deferred financing costs to be amortized to interest expense over the life of the facility. Deferred financing costs on our Revolving Facility are included in Otherother noncurrent assets. Term Facility and the Revolving Facility areis guaranteed by all of our wholly-owned domestic subsidiaries subject to certain exceptions (the guarantors) and grantsare secured by a first-priorityfirst-priority lien on substantially all of the assets of Dana and the guarantors, subject to certain exceptions. the Term Facility and the Revolving Facility bear interest at a floating rate based on, at our option, the base rate or Eurodollar ratethe Term Secured Overnight Financing Rate ("SOFR") (each as described in the revolving credit agreement) plus a margin as set forth below: Margin Total Net Leverage Ratio Base Rate Eurodollar Rate Less than or equal to 1.00:1.00 0.50 % 1.50 % Greater than 1.00:1.00 but less than or equal to 2.00:1.00 0.75 % 1.75 % Greater than 2.00:1.00 1.00 % 2.00 % We have elected to pay interest on our advance under the Term Facility at the Eurodollar Rate. The interest rate on the Term Facility, inclusive of the applicable margin, was 2.98667% as of September 30, 2017. 0.25 % 1.25 % 0.50 % 1.50 % 0.75 % 1.75 % 0.250 % 0.375 % 0.500%0.500% $275$275 of the Revolving Facility may be applied to letters of credit, which reduces availability. We pay a fee for issued and undrawn letters of credit in an amount per annum equal to the applicable margin for EurodollarSOFR rate advances based on aAs of September 30, 2017,no$15 of outstanding borrowings under the Revolving Facility but weand had utilized $21$9 for letters of credit. We had availability at September 30, 2017March 31, 2024 under the Revolving Facility of $579$1,126 after deducting the outstanding letters of credit.September 30, 2017March 31, 2024, we were in compliance with the covenants of our financing agreements. Under the Term Facility, Revolving Facility and the senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these types and, in the case of the Term Facility and Revolving Facility, a maintenance covenant tested on the last day of each fiscal quarter requiring us to maintain a first lien net leverage ratio not to exceed 2.00 to 1.00.13.12. Fair Value Measurements and Derivativessheetsheets at fair value are as follows: Fair Value Category Balance Sheet Location Fair Value Level September 30,
2017 December 31,
2016Available-for-sale securities Marketable securities 1 $ 5 $ 4 Available-for-sale securities Marketable securities 2 33 26 Currency forward contracts Cash flow hedges Accounts receivable other 2 4 2 Cash flow hedges Other accrued liabilities 2 1 4 Undesignated Accounts receivable other 2 1 1 Undesignated Other accrued liabilities 2 2 1 Currency swaps Cash flow hedges Other noncurrent liabilities 2 145 12 Undesignated Other accrued liabilities 2 2 3 March 31, 2024 December 31, 2023 2 $ 25 $ 43 2 1 7 2 3 3 2 2 5 2 4 2 11 2 8 9 1 assets and liabilities reflect quoted prices in active markets. Fair Value Level 2 assets and liabilities reflect the use of significant other observable inputs.sheetsheets at fair value are as follows: 2 $ 2,540 $ 2,465 $ 2,582 $ 2,495 September 30, 2017 December 31, 2016 Carrying Value Carrying Value Senior notes $ 1,500 $ 1,588 $ 1,550 $ 1,612 Term Facility 275 275 — — Other indebtedness* 28 22 120 101 Total $ 1,803 $ 1,885 $ 1,670 $ 1,713 *The carrying value includes the unamortized portion of a fair value adjustment related to a terminated interest rate swap at both dates. The carrying value and fair value also include a financial liability associated with certain build-to-suit lease arrangements at both dates.Fair value measurements on a nonrecurring basis — Certain assets are measured at fair value on a nonrecurring basis. These are long-lived assets that are subject to fair value adjustments only in certain circumstances. These assets include intangibleassets and property, plant and equipment which may be written down to fair value when they are held for sale or as a result of impairment.Interest rate derivatives — Our portfolio of derivative financial instruments periodically includes interest rate swaps designed to mitigate our interest rate risk. As of September 30, 2017, no fixed-to-floating interest rate swaps remain outstanding. However, a $7 fair value adjustment to the carrying amount of our December 2024 Notes, associated with a fixed-to-floating interest rate swap that had been executed but was subsequently terminated during 2015, remains deferred at September 30, 2017. This amount is being amortized as a reduction of interest expense through the period ending December 2024, the scheduled maturity date of the December 2024 Notes. The amount amortized as a reduction of interest expense was not material during the quarter or nine months ended September 30, 2017. through the next eighteen months, as well as currency swaps associated with certain recorded external notes payable and intercompany loans receivable and payable. Periodically, our foreign currency derivatives also include net investment hedges of certain of our investments in foreign operations.During the first quarter of 2017,€281 of euro-denominated intercompanycertain notes payable, issued by certain of our Luxembourg subsidiaries (the "Luxembourg Intercompany Notes") and payable to USD-functional Dana, Inc., we executed fixed-to-fixed cross-currency swaps with the same critical terms as the Luxembourg Intercompany Notes. The risk management objective of these swaps is to eliminate the variability in the functional-currency-equivalent cash flows due to changes in the euro / U.S. dollar exchange rates associated with the forecasted principal and interest payments.Additionally, during the first quarter of 2017, in conjunction with the issuance of an aggregate $15 of U.S. dollar-denominated short-term notes payable by one of our Brazilian subsidiaries (the "Brazilian Notes"), we executed fixed-to-fixed cross-currency swaps with the same critical terms as the Brazilian Notes to eliminate the variability in the functional-currency-equivalent cash flows due to changes in the U.S. dollar / Brazilian real exchange rates. During September 2017, the Brazilian Notes and the associated swaps were settled.During March 2017, in conjunction with the planned April 2017 issuance of the $400 of U.S. dollar-denominated April 2025 Notes by euro-functional Dana Financing Luxembourg S.à r.l., we executed fixed-to-fixed cross-currency swaps with the same critical terms as the April 2025 Notes to eliminate the variability in the functional-currency-equivalent cash flows due to changes in the U.S. dollar / euro exchange rates associated with the forecasted principal and interest payments.During May 2016, in conjunction with the issuance of the $375 of U.S. dollar-denominated June 2026 Notes by euro-functional Dana Financing Luxembourg S.à r.l., we executed fixed-to-fixed cross-currency swaps with the same critical terms as the June 2026 Notes to eliminate the variability in the functional-currency-equivalent cash flows due to changes in the U.S. dollar / euro exchange rates associated with the forecasted principal and interest payments. and any subsequent replacement debt, have been designated as the hedged items in each respective cash flow hedge relationship, as shown in the table below. Designated as cash flow hedges of the forecasted principal and interest payments of the underlying designated financial instruments, or subsequent replacement debt, all of the swaps economically convert the underlying designated financial instruments into the functional currency of each respective holder. The impact of the interest rate differential between the inflow and outflow rates on all fixed-to-fixed cross-currency swaps is recognized during each period as a component of interest expense.September 30, 2017:Underlying Financial Instrument Derivative Financial Instrument Description Type Face Amount Rate Designated Notional Amount Traded Amount Inflow Rate Outflow Rate June 2026 Notes Payable $ 375 6.50 % $ 375 € 338 6.50 % 5.14 % April 2025 Notes Payable $ 400 5.75 % $ 400 € 371 5.75 % 3.85 % Luxembourg Intercompany Notes Receivable € 281 3.91 % € 281 $ 300 6.00 % 3.91 % All of theMarch 31, 2024: Notional Amount $ 200 5.75 % $ 200 € 185 5.75 % 3.85 % € 93 3.85 % $ 100 € 93 5.75 % 3.85 % € 278 3.70 % € 278 $ 300 5.38 % 3.70 % $ 188 € 169 6.50 % 5.14 % € 169 $ 188 3.13 % 6.50 % all of the underlying designated financial instruments and all of the associated swaps match and that all other required criteria have been met, we do not expect to incur any ineffectiveness. As effective cash flow hedges, changes in the fair value of the swaps will be recorded in OCI during each period. Additionally, to the extent the swaps remain effective, the appropriate portion of AOCI will be reclassified to earnings each period as an offset to the foreign exchange gain or loss resulting from the remeasurement of the underlying designated financial instruments. See Note 1211 for additional information about the June 2026 Notes and the April 2025 Notes.In the event our ongoing assessment demonstrates that the critical terms of either the swaps or the underlying designated financial instruments have changed, or that there have been adverse developments regarding counterparty risk, we will use the long haul method to assess ineffectiveness of the hedging relationship. To the extent the swaps are no longer effective, changes in their fair values will be recorded in earnings. During the first nine months of 2017, deferred losses of $19 associated with all of the fixed-to-fixed cross-currency swaps were recorded in OCI and reflect the net impact of a $133 unfavorable change in the fair value of the swaps and a $114 reclassification from AOCI to earnings. The reclassification from AOCI to earnings represents an offset to a foreign exchange remeasurement gain on all of the designated debt instruments outstanding during the nine months ended September 30, 2017.$257$947 at September 30, 2017March 31, 2024 and $143$776 at December 31, 2016.2023. The total notional amount of outstanding foreign currency swaps, including but not limited to the fixed-to-fixed cross-currency swaps, was $1,129$970 at September 30, 2017March 31, 2024 and $571$981 at December 31, 2016.September 30, 2017March 31, 2024: $ 307 $ 36 $ 343 291 18 309 4 5 9 11 11 26 26 3 19 22 75 10 85 129 129 8 8 5 5 680 267 947 300 182 482 300 188 488 600 370 970 $ 1,280 $ 637 $ 1,917 Notional Amount (U.S. Dollar Equivalent) Functional Currency Traded Currency Designated as
Cash Flow Hedges Undesignated Total Maturity U.S. dollar Mexican peso, euro $ 111 $ 4 $ 115 Dec-18 Euro U.S. dollar, Canadian dollar, Hungarian forint, British pound, Swiss franc, Indian rupee, Russian ruble 39 39 Dec-18 British pound U.S. dollar, Euro 1 1 Aug-18 Swedish krona Euro 29 29 Nov-18 South African rand U.S. dollar, Euro, Thai baht 7 7 Sep-18 Thai baht U.S. dollar, Australian dollar 16 16 Apr-18 Canadian dollar U.S. dollar 14 14 Dec-18 Brazilian real Euro 4 4 Sep-18 Indian rupee U.S. dollar, British pound, Euro 32 32 Mar-19 Total forward contracts 180 77 257 U.S. dollar Euro, Canadian dollar 332 21 353 Sep-23 Euro U.S. dollar 775 775 Jun-26 South African rand U.S. dollar 1 1 Oct-17 Total currency swaps 1,107 22 1,129 Total currency derivatives $ 1,287 $ 99 $ 1,386 CashOtherother income (expense), net in the period in which the changes occur. Realized gains and losses from currency-related forward contracts associated with forecasted transactions or from other derivative instruments, including those that have been designated as cash flow hedges and those that have not been designated, are recognized in Otherthe same line item in the consolidated statement of operations in which the underlying forecasted transaction or other hedged item is recorded. Accordingly, amounts are potentially recorded in sales, cost of sales or, in certain circumstances, other income (expense), net. Gain (loss) expected to be reclassified into income in one year or less $ 19 $ 20 $ 19 1 $ 19 $ 21 $ 19 $ 2,735 $ 2,644 2,491 2,415 2 5 (9 ) (5 ) 11 (2 ) (14 ) 7 $ — $ (1 ) 2 3 During the first nine months of 2017, we recorded a deferred loss of $8 in the CTA component of OCI associated with the MXN-denominated intercompany note. Amounts recorded in CTA remain deferred in AOCI until such time as the investments in the associated subsidiaries are substantially liquidated. See also Amounts to be reclassified to earnings — Deferred gains or losses associated with effective cash flow hedges of forecasted transactions are reported in AOCI and are reclassified to earnings in the same periods in which the underlying transactions affect earnings. Amounts expected to be reclassified to earnings assume no change in the current hedge relationships or to September 30, 2017 exchange rates. Deferred gains of $3 at September 30, 2017 are expected to be reclassified to earnings during the next twelve months, compared to deferred losses of $2 at December 31, 2016. Amounts reclassified from AOCI to earnings arising from the discontinuation of cash flow hedge accounting treatment were not material during the first nine months of 2017.Note 14.13. Commitments and ContingenciesProduct liabilities — We had accrued $9 and $5 for product liability costs at September 30, 2017 and December 31, 2016. We had also recognized $9 and $4 as expected amounts recoverable from third parties at the respective dates. The increases in the liability and recoverable amounts at September 30, 2017 reflect the recognition of an increase in the estimated cost and the recovery of an insured matter. We estimate these liabilities based on assumptions about the value of the claims and about the likelihood of recoveries against us derived from our historical experience and current information.$8$6 both at September 30, 2017March 31, 2024 and December 31, 20162023. We consider the most probable method of remediation, current laws and regulations and existing technology in estimating our environmental liabilities.$6$6 of annual payments. In the event of a required payment by Dana as guarantor, we are entitled to pursue full recovery from Metalsa of the amounts paid under the guarantee and to take possession of the leased property.what the eventual outcome of these matters will be.matters. However, based on current knowledge and after consultation with legal counsel, we believe that any liabilities that may result from these proceedings will not have a material adverse effect on our liquidity, financial condition or results of operations.15.14. Warranty Obligations Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Balance, beginning of period $ 74 $ 63 $ 66 $ 56 Acquisitions (2 ) 6 Amounts accrued for current period sales 8 6 23 19 Adjustments of prior estimates 4 7 9 19 Settlements of warranty claims (9 ) (10 ) (32 ) (28 ) Currency impact 1 3 1 Balance, end of period $ 75 $ 67 $ 75 $ 67 $ 116 $ 108 10 10 2 8 (12 ) (17 ) (1 ) (1 ) $ 115 $ 108 The Acquisitions line includes approximately $4 related to the acquisition of BFP and BPT that is subject to recovery from the seller.16.15. Income Taxes We believe that it is reasonably possible that a valuation allowance of up to $12 related to a subsidiary in Argentina will be released in the next twelve months.incomeincome tax expense related to operations of $33$37 and $13$30 for the quarters ended September 30, 2017first quarter of 2024 and 2016 and $94 and $66 for the respective nine-month periods.2023, respectively. Our effective tax rates were 31%106% and 29% in50% for the first ninethree months ended March 31, 2024 and 2023. During the first quarter of 2017 and 2016.2024, we recorded tax expense of $11 for valuation allowances related to foreign locations. Our effective income tax rates vary from the U.S. federal statutory rate of 35%21% due to establishment, release, and adjustment of valuation allowances in several countries, nondeductible expenses and deemed income, local tax incentives in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings. The $8 from amortization of the prepaideffective income tax asset recorded in conjunction with the intercompany sale of certain operating assetsrate may vary significantly due to a non-U.S. affiliate in 2015 increased the effective ratefluctuations in the first nine monthsamounts and sources, both foreign and domestic, of 2016. The adoption of new accounting guidance resultedpretax income and changes in the $179 write-offamounts of that prepaid tax asset at the beginningnon-deductible expenses.We provide for U.S. federal income and non-U.S. withholding taxes on the earnings of our non-U.S. operations that are not considered to be permanently reinvested. Accordingly, we continue to analyze and adjust the estimated tax impact of the income and non-U.S. withholding tax liabilities based on the amount and source of these earnings. As part of the annual effective tax rate, we recognized net expense of $5 and $1 for the quarters ended September 30, 2017 and 2016 and $9 and $5 for the respective nine-month periods related to future income taxes and non-U.S. withholding taxes on repatriations from operations that are not permanently reinvested. We also paid withholding taxes of $1 and $2 for the quarters ended September 30, 2017 and 2016 and $5 and $4 for the respective nine-month periods related to the actual transfer of funds to the U.S. and transfers of funds between foreign subsidiaries.Note 17.16. Other Income (Expense), Net Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Government grants and incentives $ 2 $ 2 $ 6 $ 5 Foreign exchange loss (2 ) (3 ) (4 ) Strategic transaction expenses (3 ) (3 ) (20 ) (6 ) Gain on sale of marketable securities 7 7 Insurance and other recoveries 1 Amounts attributable to previously divested/closed operations 3 1 Other, net 2 2 6 5 Other income (expense), net $ 1 $ 6 $ (8 ) $ 9 $ (4 ) $ (3 ) 1 1 1 4 (2 ) (1 ) 6 4 $ 2 $ 5 costs. The increase incosts, and other strategic initiatives. Strategic transaction expenses in 2017 isthe three months ended March 31, 2024 and 2023 were primarily attributable to investigating potential acquisitions and business ventures and other strategic initiatives.acquisitionscustomers are established based on industry and regional practices and generally do not exceed 180 days. BFPeach payment made to our customers to determine the proper accounting by understanding the nature of the payment, the rights and BPTobligations in the contract, and other relevant facts and circumstances. Upfront payments to our customers are capitalized if we determine that the payments are incremental and incurred only if the new business is obtained and we expect to recover these amounts from Brevinithe customer over the term of the new business program. We recognize a reduction to revenue as products that the upfront payments are related to are transferred to the customer, based on the total amount of products expected to be sold over the term of the program. We evaluate the amounts capitalized each period for recoverability and USM – Warren from USM.expense any amounts that are no longer expected to be recovered. We had $5 and $5 recorded in other current assets and $33 and $34 recorded in other noncurrent assets at March 31, 2024 and December 31, 2023.214 for additional information.Amounts attributable to previously divested/closed operations includes the receiptDecember 2016 divestitureconsolidated balance sheets.DCLLC during the second quarterrevenue —2017. See our operating segments by geographical market: $ 755 $ 640 149 132 62 53 132 137 $ 1,098 $ 962 $ 293 $ 287 84 81 109 103 38 51 $ 524 $ 522 $ 92 $ 97 525 573 5 4 159 168 $ 781 $ 842 $ 187 $ 159 117 134 8 8 20 17 $ 332 $ 318 $ 1,327 $ 1,183 875 920 184 168 349 373 $ 2,735 $ 2,644 Note 18. Segmentshigh-technologyhigh technology products to virtually every major vehicle and engine manufacturer in the world. We also serve the stationary industrial market. Our technologies include drive and motion productssystems (axles, driveshafts, planetarytransmissions, and wheel and track drives); motion systems (winches, slew drives, and hub drives, power-transmission products, tire-management products,drives); electrodynamic technologies (motors, inverters, software and transmissions)control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, heat shields,cam covers, and fuel-cell plates)oil pan modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air cooling, and exhaust-gas heat recovery)thermal-acoustical protective shielding); and fluid-power products (pumps, valves, motors,digital solutions (active and controls)passive system controls and descriptive and predictive analytics). We serve our global light vehicle, medium/heavy vehicle and off-highway markets through four operating segments – Light Vehicle Driveline TechnologiesDrive Systems (Light Vehicle), Commercial Vehicle Driveline TechnologiesDrive and Motion Systems (Commercial Vehicle), Off-Highway Drive and Motion TechnologiesSystems (Off-Highway), and Power Technologies, which is the center of excellence for sealing and thermal-management technologies that span all customers in our on-highway and off-highway markets. These operating segments have global responsibility and accountability for business commercial activities and financial performance. 2017 2016 Three Months Ended September 30, External Sales Inter-Segment Sales Segment EBITDA External Sales Inter-Segment Sales Segment EBITDA Light Vehicle $ 805 $ 33 $ 91 $ 631 $ 27 $ 73 Commercial Vehicle 371 25 33 294 21 23 Off-Highway 384 1 55 199 28 Power Technologies 271 5 41 260 3 42 Eliminations and other (64 ) (51 ) Total $ 1,831 $ — $ 220 $ 1,384 $ — $ 166 Nine Months Ended September 30, Light Vehicle $ 2,369 $ 96 $ 273 $ 1,913 $ 91 $ 202 Commercial Vehicle 1,057 72 91 976 64 81 Off-Highway 1,107 2 157 692 2 97 Power Technologies 839 12 132 798 11 120 Eliminations and other (182 ) (168 ) Total $ 5,372 $ — $ 653 $ 4,379 $ — $ 500 Prior to the third quarter of 2017, our Crossville, Tennessee, distribution center rolled up within our Commercial Vehicle operating segment for purposes of inter-segment sales reporting. Beginning in the third quarter of 2017, the distribution center has been split between our Commercial Vehicle and Off-Highway operating segments. This change in management reporting has resulted in a decrease in the inter-segment sales reported by our Off-Highway operating segment. Prior period amounts have been recast to conform with the current presentation. This change in management reporting had no impact on segment reporting of external sales or segment EBITDA. $ 1,098 $ 51 $ 67 $ 962 $ 52 $ 49 524 29 17 522 32 17 781 17 115 842 17 118 332 6 27 318 8 23 (103 ) (109 ) $ 2,735 $ — $ 226 $ 2,644 $ — $ 207 $ 226 $ 207 (3 ) (3 ) (101 ) (92 ) (5 ) (5 ) (4 ) (3 ) (5 ) (1 ) (6 ) (6 ) (2 ) (1 ) (8 ) (29 ) (1 ) 2 70 90 4 4 39 34 35 60 37 30 2 1 $ — $ 31 Three Months Ended
September 30,Nine Months Ended
September 30, 2017 2016 2017 2016 Segment EBITDA $ 220 $ 166 $ 653 $ 500 Corporate expense and other items, net (4 ) 2 (15 ) (6 ) Depreciation (58 ) (45 ) (162 ) (129 ) Amortization of intangibles (4 ) (3 ) (10 ) (7 ) Restructuring (2 ) (17 ) (14 ) (23 ) Stock compensation expense (7 ) (4 ) (17 ) (11 ) Strategic transaction expenses (3 ) (3 ) (20 ) (6 ) Acquisition related inventory adjustments (14 ) Other items (2 ) (5 ) (4 ) Amounts attributable to previously divested/closed operations (1 ) 2 3 Earnings before interest and income taxes 139 96 398 317 Loss on extinguishment of debt (13 ) (19 ) (17 ) Interest expense (25 ) (27 ) (79 ) (84 ) Interest income 3 3 8 8 Earnings before income taxes 104 72 308 224 Income tax expense 33 13 94 66 Equity in earnings of affiliates 2 2 12 6 Net income $ 73 $ 61 $ 226 $ 164 – primarily(primarily axles, driveshaftsaxle housings and wheel-end braking systems – supplied to OEMs.exceeding $5at September 30, 2017March 31, 2024 — 50% $ 52 50% 22 48% 15 50% 4 6 99 24 $ 123 Investment Dongfeng Dana Axle Co., Ltd. (DDAC) 50% $ 90 Bendix Spicer Foundation Brake, LLC 20% 45 Axles India Limited 48% 8 All others as a group 10 Investments in equity affiliates 153 Investments in affiliates carried at cost 2 Investments in affiliates $ 155 Summarized financial information for DDAC — Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Sales $ 215 $ 145 $ 615 $ 425 Gross profit $ 21 $ 21 $ 72 $ 53 Earnings before income taxes $ 5 $ 5 $ 15 $ 8 Net income $ 3 $ 2 $ 11 $ 4 Dana's equity in earnings of affiliate $ 1 $ — $ 4 $ — Our equity in earnings of DDAC was reduced by $3 during the second quarter of 2017 due to charges associated with the anticipated transfer and conversion of certain assets to the local government.Ohio, and was incorporated in Delaware in 2007.Ohio. We are a global providerworld leader in providing power-conveyance and energy-management solutions for vehicles and machinery. The company's portfolio improves the efficiency, performance, and sustainability of high-technology products to virtually every major vehiclelight vehicles, commercial vehicles, and engine manufacturer in the world. We also serve the stationary industrial market.off-highway equipment. Our technologies include drive and motion productssystems (axles, driveshafts, planetarytransmissions, and wheel and track drives); motion systems (winches, slew drives, and hub drives, power-transmission products, tire-management products,drives); electrodynamic technologies (motors, inverters, software and transmissions)control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, heat shields,cam covers, and fuel-cell plates)oil pan modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air cooling, and exhaust-gas heat recovery)thermal-acoustical protective shielding); and fluid-power products (pumps, valves, motors,digital solutions (active and controls)passive system controls and descriptive and predictive analytics). We serve our global light vehicle, medium/heavy vehicle and off-highway markets through four business units – Light Vehicle Driveline TechnologiesDrive Systems (Light Vehicle), Commercial Vehicle Driveline TechnologiesDrive and Motion Systems (Commercial Vehicle), Off-Highway Drive and Motion TechnologiesSystems (Off-Highway) and Power Technologies, which is the center of excellence for sealing and thermal-management technologies that span all customers in our on-highway and off-highway markets. We have a diverse customer base and geographic footprint which minimizes our exposure to individual market and segment declines. At September 30, 2017,March 31, 2024, we employed approximately 29,40042,000 people and operated in 34 countries and had more than 100 major facilities housing manufacturing and distribution operations, technical and engineering centers and administrative offices.September 30, 2017March 31, 2024 and 20162023 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 % of % of % of % of Dollars Total Dollars Total Dollars Total Dollars Total Light Vehicle $ 805 44.0 % $ 631 45.6 % $ 2,369 44.1 % $ 1,913 43.7 % Commercial Vehicle 371 20.2 % 294 21.2 % 1,057 19.7 % 976 22.3 % Off-Highway 384 21.0 % 199 14.4 % 1,107 20.6 % 692 15.8 % Power Technologies 271 14.8 % 260 18.8 % 839 15.6 % 798 18.2 % Total $ 1,831 $ 1,384 $ 5,372 $ 4,379 $ 1,098 40.1 % $ 962 36.4 % 524 19.2 % 522 19.7 % 781 28.6 % 842 31.9 % 332 12.1 % 318 12.0 % $ 2,735 $ 2,644 In 2016 we outlined our currentwhich leveragesbuilds on our strong technology foundation and leverages our commitment to continuous improvement. Our strategy places increased focus leveraging resources across the organization satisfying customer requirements,while driving a customer-centric focus, expanding products andour global markets, and accelerating commercializationdelivering innovative solutions as we evolve into the era of new technology.operationsoperations. This foundational element enables us to infuse strong operational disciplines throughout the strategy, making it practical, actionable, and effective. It enables us to capitalize on being a major drive systems supplier across all three end mobility markets. We are achieving improved profitability by sharingactively seeking synergies across our capabilities, technology,engineering, purchasing, and manufacturing base. We have strengthened the portfolio by acquiring critical assets, and peoplewe are utilizing our physical and intellectual capital to amplify innovation across the enterprise, leading to improved execution and increased customer satisfaction. Although we have taken significant strides to improve our profitability and margins, particularly through streamlining and rationalizing our manufacturing activities, we believe additional opportunities remain toenterprise. Leveraging these core elements can further improve ourexpand the cost performance. Leveraging investments across multiple end markets and making disciplined, value enhancing acquisitions, will allow us to bring product to market faster, grow our top-line sales and enhance financial returns.Strengthening customer centricity and expanding global markets are key elementsefficiencies of our strategy that focus on market penetration. Foundationalcommon technologies and deliver a sustainable competitive advantage for Dana.growingbe at the business is directing the entire organization to putting the customerheart of who we are. Putting our customers at the center of our value system is firmly embedded in our culture and shifting from transactionalis driving growth by focusing on customer relationships and providing value to relationship-based interactions.our customers. These relationships are built on a foundation of providingstrengthened as we are physically located where we need to be in order to provide unparalleled technology with exceptional quality, deliveryservice, and value. With even stronger relationships we will be better positioned to supportare prioritizing our customers’ most important global and flagship programsneeds as we engineer solutions that differentiate their products, while making it easier to do business with Dana by digitizing their experience. Our customer-centric focus has uniquely positioned us to win more than our fair share of new business and capitalize on future customer outsourcing initiatives.opportunities. Specifically, our manufacturing and technology center footprint positions to support customers globally – an important factor as many of our customers are increasingly focused on common solutions for global platforms. While growth opportunities are present in each region of the world, we have a primary focus on building our presence and local capability in the Asia Pacific region. Over the last few years, we have opened two new engineering facilities in the region along with new gear manufacturing facilities in India and Thailand. This past quarter, we announced breaking ground on a new facility in China to produce drive units with disconnecting all-wheel-drive technology as part of a new global customer program.In addition to Asia, we see further growth opportunity in Eastern Europe where we have commenced construction of a new gear manufacturing facility in Hungary. This will be our third facility in the country and will give us the capability to cost effectively manufacture gears, one of our core technologies, and efficiently service our customers within the region.The final two elements of our enterprise strategy, commercializing new technology and accelerating hybridization and electrification, focus on opportunities for product expansion. Bringing new innovations to market as industry leading products will drive growth as our new products and technology provide our customers with cutting edge solutions, address end user needs and capitalize on key market trends. An example is our industry leading electronically disconnecting all-wheel drive technology, which we believe is the most fuel efficient rapidly disconnecting system in the market and was recently selected by a major global customer for a significant new global vehicle platform – opening up new commercial channels for us in the passenger car, crossover and sport utility vehicle markets.Initiatives to capitalize on evolving hybridizationmarket growth trends as we evolve our core technology capabilities. We are also focused on enhancing our physical products with digital content to provide smart systems, and we see an opportunity to become a digital systems provider by delivering software as a service to our traditional end customers. This focus on delivering solutions based on our core technology is leading to new business wins and increasing our content per vehicle. We have made significant investments - both organically and inorganically - allowing us to move to the next phase, which is to Lead electric propulsion.vehicle trendsthrough both core Dana technologies and targeted strategic acquisitions and are a core ingredientpositioned today to lead the market. Our investments in electrodynamic expertise and technologies combined with Dana’s longstanding mechatronics capabilities has allowed us to develop and deliver fully integrated e-Propulsion systems that are power-dense and achieve optimal efficiency through the integration of the current strategy. In additioncomponents that we offer due to our current technologiesmechatronics capabilities. With recent electric vehicle program awards, we are well on our way to achieving our growth objectives in battery cooling and fuel cells, this element of the strategy is leveraging our electronics controls expertise across all our business units and applications such as advanced vehicle hybridization and electrification initiatives. We are working with customers to develop new solutions for those markets where electrification will be adopted first such as hybrids, buses and urban delivery vehicles. These new solutions, which include advanced electric propulsion systems with fully integrated motors and controls, are included in our recently launched Spicer Electrified portfolio of products.thisour enterprise strategy is positioning Dana to grow profitably over the next few years due to increased customer focus as we leverage our core capabilities, expand into new markets, develop and commercialize new technologies, including for hybrid and electric vehicles.returnsand capital structurereturn actions— When evaluating capital structure initiatives, we balance our growth opportunities and shareholder value initiatives with maintaining a strong balance sheet and accessreturning capital to capital. Our strong financial position has enabled usshareholders. Except for three quarters in 2020, when we temporarily suspended dividends to simplify our capital structure while providing returnscommon shareholders in response to the global COVID pandemic, we have paid quarterly dividends to our shareholders in the form of cash dividends and reduction in the number of shares outstanding. Over the past several years, we returned $1,481 of cash to shareholders in connection with redemption of all of our preferred stock and repurchase of common shares. From program inception in 2012 through December 31, 2016, we repurchased approximately 74 million shares, inclusive of the common share equivalent reduction resulting from redemption of preferred shares. Remaining share repurchase authorization under theprogram approved by our Board of Directors is $219. We declared and paid quarterly common stock dividendsshareholders since the first quarter of 2013, raising the dividend from five cents to six cents per share2012.2015.We have taken advantage of the lower interest rate environment to refinance our senior notes at lower rates while extending the maturities. In each of the past two years, we completed refinancing transactions that resulted in lower effective interest rates while extending maturities. In April 2017, we completed a $400 2025 note offering, the proceeds of which were used to extend maturities on nearly $400 of indebtedness at significantly lower interest rates. In this year's third quarter, we redeemed an additional $350 of fixed-rate senior notes, utilizing available cash and proceeds from issuance of a floating-rate term loan. In connection with amending our credit and guaranty agreement to effectuate the term loan, we also increased our2025. Our $1,150 revolving credit credit facility by $100, providing us with $600matures on March 14, 2028. See Note 11 to our consolidated financial statements in Item 1 of back-up liquidity through 2022.In January 2016, we completedPowered by recognized brands such as Dana®, Spicer®, Spicer Electrified™, Victor Reinz®, Glaser®, GWB®, Thompson®, Tru-Cool®, SVL®, and Transejes™, Dana delivers a broad range of aftermarket solutions – including genuine, all makes, and value lines – servicing passenger, commercial, and off-highway vehicles across the acquisition of Magnum® Gaskets' (Magnum) aftermarket distribution business which includes the Magnum brand, product portfolio, existing customer contractsglobe.distribution rights. The Magnum brand is the third largest aftermarket sealing brand in the U.S. and Canada, providing us with access to new customers for sealing products and an additional aftermarket channel for other products.Selective acquisitions — Oureconomically attractive, our acquisition focus is principally directed at “bolt-on” or adjacent acquisition opportunities that have a strategic fit with our existing core businesses, particularly opportunities that support our enterprise strategy and enhance the value proposition of our product offerings. Any potential acquisition will be evaluated in the same manner we currently consider customer program opportunities and other uses of capital – with a disciplined financial approach designed to ensure profitable growth and increased shareholder value.AcquisitionsBFP and BPT — On February 1, 2017, we acquired 80% ownership interestsBrevini Fluid Power S.p.A. (BFP) and Brevini Power Transmission S.p.A. (BPT) from Brevini Group S.p.A. (Brevini). The acquisition expands our Off-Highway operating segment product portfolio to include technologies for tracked vehicles, doubling our addressable market for off-highway driveline systems and establishing Dana as the only off-highway solutions provider that can manage the power to both move the equipment and perform its critical work functions. This acquisition also brings a platform of technologies that can be leveraged in our light and commercial vehicle end markets, helping to accelerate our hybridization and electrification initiatives. The BFP and BPT acquisitions added $105 and $284 of sales and $12 and $30 of adjusted EBITDA in the third quarter and first nine months of 2017.paid $181 at closing using cash on hand and assumed debt of $182 as part of the transaction. The purchase price is subject to adjustment upon determination of the net indebtedness and net working capital levels of BFP and BPT as of the closing date. The terms of the agreement provide Dana the right to call Brevini's noncontrolling interests in BFP and BPT, and Brevini the right to put its noncontrolling interests in BFP and BPT to Dana, assuming Dana does not exercise its call rights, at dates and prices defined in the agreement. In connection with the acquisition of BFP and BPT, Dana agreed to purchase certain real estate currently being leased by BPT from a Brevini affiliate for €25 by November 1, 2017. Reference is made to Note 2 of the consolidated financial statements in Item 1 of Part I for the allocation of purchase consideration to assets acquired and liabilities assumed. The results of operations of these businesses are reported within our Off-Highway operating segment.USM – Warren — On March 1, 2017, we completed the purchase of Warren Manufacturing LLC (USM – Warren), which holds certain assets and liabilities of the former Warren, Michigan production unit of U.S. Manufacturing Corporation (USM). With this transaction, we acquired proprietary tube-manufacturing processes and light-weighting intellectual property for axle tubes and shafts. Significant content was previously purchased from USM. Vertically integrating this content strengthens the supply chain for several of our most strategic customers. The new product and process technologies for light-weighting will assistserve our customers in achievingthree core global end markets: light vehicle, primarily full-frame trucks and SUVs; commercial vehicle, including medium-and heavy-duty trucks and busses; and off-highway, including construction, mining, and agriculture equipment. sustainabilityuseful life. Key market drivers include regional economic growth rates; cost and fuel efficiency goals. The USM – Warren acquisition added $28availability of end customer financing; industrial output; commodity production and $69 of salespricing; and $3residential and $9 of adjusted EBITDA innonresidential construction rates. Our multi-market coverage and broad customer base help provide stability across the third quarter and first nine months of 2017.We paid $104 for thiscycles while mitigating secular variability. During 2023, we saw incremental improvements across our end markets despite continuing, but lessening, global supply chain disruptions.at closing, including $25 to effectively settle trade payable obligations originating from product purchases Dana made from USM prioris weighted more heavily to the acquisition. No debt was assumed with this transactiontruck and SUV segments of the light-vehicle market versus the passenger-car segment. Our vehicle content is greater on rear-wheel drive, four-wheel drive, and all-wheel drive vehicles, as well as hybrid and electric vehicles. During 2023, light-truck markets improved across all regions except North America, which was funded using cash on hand. Post-closing purchase price adjustments for working capital and other items, which totaled less than $1, were received in this year's third quarter. Reference is made to Note 2negatively impacted by labor strikes during the fourth quarter of 2023 at the consolidated financial statements in Item 1U.S. operations of Part Iseveral original equipment manufacturers. The outlook for the allocationfull year of purchase consideration to assets acquired and liabilities assumed. The results of operations of the USM – Warren business are reported within our Light Vehicle operating segment.SIFCO —On December 23, 2016, we acquired strategic assets of the commercial vehicle steer axle systems and related forged components businesses of SIFCO. The acquisition enables us to enhance our vertically integrated supply chain, which will further improve our cost structure and customer satisfaction by leveraging SIFCO's extensive experience and knowledge of sophisticated forged components. In addition to strengthening our position as a central source for products that use forged and machined parts throughout the region, this acquisition enables us to better accommodate the local content requirements of our customers, which reduces their import and other region-specific costs.As part of the acquisition, we added two manufacturing facilities and approximately 1,400 employees. The strategic assets were acquired by Dana free and clear of any liens, claims or encumbrances and without assumption of any legacy liabilities of SIFCO. We had sales of $862024 reflects global light-truck production being relatively stable across all regions in 2016 resulting from business conducted under the previous supply agreement with SIFCO. The additional business relationships obtained as a result of the acquisition are expected to generate incremental sales of approximately $50 at current production levels.The SIFCO purchase price was $70,comparison with the paymentprior year.$10 of the purchase price deferred until December 2017 pending any claims under indemnification provisions of the purchase agreement. Reference is made to Note 2 of the consolidated financial statements in Item 1 of Part I for the allocation of purchase consideration to assets acquired and liabilities assumed. The results of operations of the SIFCO related business are reported within our Commercial Vehicle operating segment.Magnum — On January 29, 2016, we acquired the aftermarket distribution business of Magnum, a U.S.-based supplier of gaskets and sealing products for automotive and commercial vehicle applications, for a purchase price of $18 at closing and additional cash payments of up to $2 contingent upon the achievement of certain sales metrics over the two-year period following the acquisition. As of the closing date of the acquisition, the contingent consideration was assigned a fair value of approximately $1. Assets acquired included trademarks and trade names, customer relationships and goodwill. The results of operations of Magnum are reported within our Power Technologies operating segment.DivestituresNippon Reinz — On November 30, 2016, we sold our 53.7% interest in Nippon Reinz Co. Ltd. (Nippon Reinz) to Nichias Corporation. Dana received net cash proceeds of $5 and recognized a pre-tax loss of $3 on the divestiture of Nippon Reinz, inclusive of the derecognition of the related noncontrolling interest. Nippon Reinz had sales of $42 in 2016 through the transaction date.Dana Companies —On December 30, 2016, we completed the divestiture of Dana Companies, LLC (DCLLC), a consolidated wholly-owned limited liability company that was established as part of our reorganization in 2008 to hold and manage personal injury asbestos claims retained by the reorganized Dana Corporation, which was merged into DCLLC. The assets of DCLLC at time of sale included cash and marketable securities along with the rights to insurance coverage in place to satisfy a significant portion of its liabilities. We received net cash proceeds of $29 at closing on December 30, 2016, with $3 retained by the purchaser subject to the satisfaction of certain future conditions. We recognized a pre-tax loss of $77 in 2016 upon completion of the transaction. We received payment of the retained $3 in the second quarter of 2017 and recognized such amount as income. Following completion of the sale, Dana has no obligation with respect to current or future asbestos claims. The sale of this business also enhanced our available liquidity since the net proceeds from the sale are available for use in our core businesses.Trends in Our MarketsGlobal Vehicle Production (Full Year) Actual (Units in thousands) Dana 2017 Outlook 2016 2015 North America Light Truck (Full Frame) 4,500 to 4,600 4,457 4,136 Light Vehicle Engines 14,800 to 15,000 15,913 15,474 Medium Truck (Classes 5-7) 240 to 250 233 237 Heavy Truck (Class 8) 245 to 255 228 323 Agricultural Equipment 50 to 60 53 58 Construction/Mining Equipment 150 to 160 150 158 Europe (including Eastern Europe) Light Truck 9,900 to 10,100 9,306 8,546 Light Vehicle Engines 23,800 to 24,300 23,287 22,570 Medium/Heavy Truck 460 to 485 463 434 Agricultural Equipment 195 to 210 193 202 Construction/Mining Equipment 295 to 310 290 299 South America Light Truck 1,200 to 1,250 980 940 Light Vehicle Engines 2,300 to 2,400 2,112 2,439 Medium/Heavy Truck 75 to 85 70 88 Agricultural Equipment 30 to 35 29 32 Construction/Mining Equipment 10 to 15 10 13 Asia-Pacific Light Truck 29,000 to 29,500 27,465 24,160 Light Vehicle Engines 51,000 to 52,000 50,533 47,209 Medium/Heavy Truck 1,900 to 2,000 1,661 1,383 Agricultural Equipment 640 to 670 648 676 Construction/Mining Equipment 430 to 450 396 405 North AmericaLight vehicle markets — Improving economic conditions during the past few years have contributed to increased light vehicle sales and production levels in North America. Overall economic conditionsClass-8 trucks in North America continue to be relatively favorable with improving employment levels and upward trending consumer confidence. There continues, however, to be considerable uncertainty following the recent transition to new government leadership in the United States, and the potential impact on the economy of future actions initiated by the new administration. The North America light vehicle market has begun to show signs of weakeningincreased 8% over 2022 reflecting increased demand levels. Strong sales levels the past few years have significantly reduced the built-up demand to replace older vehicles. Increasing interest rates, high levels of consumer debt and declining used car prices are developments that are likely to constrict demand for new vehicles. To date, these effects have been most notable in passenger car sales. Light vehicle sales for the first nine months of 2017 decreased about 2% compared to the same period of 2016, driven by a decline in passenger car sales of about 9%. Helped by continued low fuel prices, light truck market demand continued to be relatively strong in this year's first nine months, with sales up 3% compared to last year. Many of our programs are focused inhigher freight volumes and rates during the full frame light truck segment. Sales in this segment for the first nine months of 2017 were up about 2%. Production levels were reflective of light vehicle sales. Production of approximately 13 million light vehicles in the first nine months of 2017 was 3% lower than in 2016, with passenger car production down 12% and light truck production 2% higher. Light vehicle engine production was impacted more by the developments in the passenger car segment, down 6% from the first nine months of last year. In the key full frame light truck segment, production levels for the first nine months of 2017 increased about 3% compared to the same period of 2016. Days’ supply of total light vehicles in the U.S. at the end of September 2017 was around 64 days, up from 62 days at the end of December 2016 and comparable with September 2016. In the full frame light truck segment, inventory levels were 73 days at the end of September 2017, up from 65 days at the end of December 2016 and comparable with September 2016.For the remainder of 2017, we expect a generally solid economic climate in North America. However, with the strength in this market the past couple years, we believe slightly lower production levels are likely. We have reduced our full year 2017 outlook for light vehicle engine production to 14.8 to 15.0 million units which is a decrease of about 6 to 7% compared with 2016. With the full frame light truck segment continuing to show relative strength, our 2017 production outlook remains unchanged at 4.5 to 4.6 million trucks, an increase of 1 to 3% from 2016.Medium/heavy vehicle markets — The commercial vehicle market is similarly impacted by many of the same macroeconomic developments impacting the light vehicle market. Strong production levels in the heavy truck segment in 2014 and first half of 2015 led to more trucks than required for freight demand. As a consequence, production levels in 2016 were scaled back. Both heavy and medium duty markets have shown a modest increase in2023, with demand tapering during the first nine months of 2017. During the first nine months of 2017, heavy duty Class 8 truck production was up approximately 3% while medium duty Classes 5-7 truck production was up 6% compared with 2016.Class 8 order levels continue to improve from those experienced in the second half of 20162023 as freight volumes and the first quarter of 2017, prompting us to increase ourrates trended downward. The outlook for full year 2017 Class 82024 is for weakening demand with production down moderately from 2023 levels driven by lower year-over-year freight volumes and rates. Medium-duty truck production in North America experienced a modest 9% year-over-year increase from 2022 to 245,000 to 255,000 trucks,2023. The outlook for 2024 is for a level which is up 7 to 12% compared withmodest decrease in production over the 2016 build level. In the medium duty segment we have tightened our range, expecting full year 2017 medium duty production to be in the range of 240,000 to 250,000 vehicles, up 3 to 7% from 2016.Marketsprior year. Outside of North America,Light vehicle markets — Signs production of an improved overall European economy have been evident, albeit mixed at times, during the past few years. Reflective of a modestly improved economy, light vehicle production levels have increased with light vehicle engine production being up about 3%medium- and heavy-duty trucks in 2016 after increasing 5% in 2015, and light truck production being higher by 9 to 10% in each of the past two years. Overall market improvement continued in the first nine months of 2017 as light vehicle engine production increased about 3% and light truck production was up about 9% compared to the first nine months of last year. The United Kingdom's decision to withdraw from the European Union along with political developments in other European countries has cast an element of uncertainty around continued economic improvement in the region. At present, we expect overall stable to improving economic conditions across the entire region in 2017. Our full year 2017 outlook for light vehicle engines is unchanged from July, with production levels expected to be up 2 to 4% over 2016. Our full year 2017 outlook for light truck demand is unchanged from July, with production for the year expected to be about 6 to 9% higher than 2016. The economic climate in most South America markets the past few years has beendeclined 32% in 2023 reflecting weak volatile and challenging. After significant production declines in 2014 and 2015, there were signs that demand levels had bottomed out in 2016. Production levels in the first nine months of 2017 were reflective of an improving market, with light vehicle engine production up about 17% compared to the same period in 2016 and light truck production higher by about 27%. With the improvement experienced during the first nine months of this year, we have increased our full year outlook for light truck production. We now expect full year light truck production to be up 22 to 28%. Our full year 2017 outlook for light vehicle engine production is unchanged from July, with production levels expected to be up 9 to 14% over 2016. The Asia Pacific markets have been relatively strong the past few years. Light truck production increased 8% in 2015 and was up another 14% in 2016, while light vehicle engine production increased 2% in 2015 and another 7% in 2016. This year's first nine months exhibited signs of continuing growth in the region. Nine-month 2017 light vehicle engine build increased 4% and light truck production was higher by 9% when compared with the same period last year. Our full year 2017 outlook for the Asia Pacific light vehicle markets remains unchanged, with light truck production expected to be 6 to 7% higher than 2016 and light vehicle engine production expected to be up 1% to 3% from last year.Medium/heavy vehicle markets — Some of the same factors referenced above that affected light vehicle markets outside of North America similarly affected the medium/heavy markets, albeit with improvements in the medium/heavy truck market being a little slower to manifest. Signs of a strengthening European market emerged in 2015 and 2016 with medium/heavy truck production increasing 9% in 2015 and 7% in 2016. Market strengthening continued in this year's first nine months with production increasing by 4% compared with the same period last year. Our full year outlook remains unchanged, reflecting 2017 medium/heavy truck production being flat to up 5% compared to last year. A weakening South America economic climate beginning in 2014 led to medium/heavy truck production declining 47% in 2015 and another 20% in 2016. As with the light vehicle markets, we have begun to see signs of improving economic conditions in the region. Medium/heavy truck production during the first nine months of 2017 was up 21% from the same period last year. We expect higher year-over-year production levels to continue in the fourth quarter. Our full year 2017The 2024 outlook for South America is unchanged at 75,000 to 85,000 units, an increase of 7 to 21% from 2016. A stronger than expected China market and an improving India market contributed to anfor a modest increase in medium/heavy truck production in the Asia Pacific region of about 20% in 2016. Production in this year's first nine months was especially strong – up more than 30% from the first nine months of last year. This year's strong demand was driven in part by impending regulations in China that limit axle load and weight which accelerated buying during the last half of 2016 and into2017 prior to the new regulations becoming effective. Although production levels2023 as local economic conditions are expected to temper somesomewhat improve. Production of medium- and heavy-duty trucks in Asia Pacific, driven by China and India, increased 18% in 2023. The 2024 outlook for Asia Pacific is for a modest increase in production from the fourth quarter, our full year 2017 production outlook was increased from July to levels 14 to 20% higher than 2016.Off-Highway Markets prior year.approximately 75%68% of its 2023 sales coming from Europeproducts manufactured in Europe; however, a large portion of these products are utilized in vehicle production outside the region. The construction equipment segment of the off-highway market is closely related to global economic growth and 15% frominfrastructure investment. The global construction equipment market continued to rebound in 2023 with production up 5% over the prior year. The outlook for 2024 is for modest growth in North America, South America and Asia Pacific, combined. We serve several segments ofpartially offset by moderately lower production levels in Europe. End-user investment in the diverse off-highwaymining equipment segment is driven by prices for commodity products produced by underground mining. The global mining equipment market including construction, agriculture, mining and material handling. Our largest markets are the construction/mining and agricultural equipment segments which havehas been relatively weakmostly stable over the past few years. Global demandseveral years as industry participants have maintained vehicle inventory levels to match commodity output, and this trend is expected to continue in 2024. The agriculture equipment market is the agriculture market was down about 11% in 2014, 7% in 2015 and 5% in 2016. The construction/third of our key off-highway segments. Like the underground mining segment, weakened about 4%investment in 2014, 11%agriculture equipment is primarily driven by prices for commodities. Farm commodity price decreases in 2015 and 3%2023 spurred a 2% decrease in 2016. During this year's first nine months, we have seen generally favorable developments in market demand, particularly in construction and mining. Our production outlooks for the year in the various regions largely remain unchanged or have strengthened some around the higher end of the ranges. We have increased theagriculture equipment production. The outlook for Asia Pacific construction and mining, which2024 is now expectedfor global end-market demand to be up 9 to 14%soften, reflecting a modest decrease from lastthe prior year.Weaker international currencies relative tocurrency — With 54% of our first quarter 2024 sales coming from outside the U.S. dollar, international currency movements can have had a significant impacteffect on our sales and results of operations the past few years.operations. The United Kingdom's decision to exit the European Union ("Brexit") has provided further uncertainty and potential volatility around European currencies, along with uncertain effects of future trade and other cross-border activities of the United Kingdom with the European Union and other countries. With new government leadership in the U.S. assuming control in early 2017, there is added uncertainly around future economic and trade policy and its potential impact on the U.S. dollar relative to other currencies. Approximately 55% of our consolidated sales in the first nine months of 2017 were outside the U.S., with euro zone countries accounted for 50% of our first quarter 2024 non-U.S. sales, while India, Brazil Mexico and the United Kingdom accountingChina accounted for approximately 42%10%, 9% and 7%, 7% and 5% of those non-U.S. sales. The potential impact of future U.S. economic and trade policy led to significant weakening of the Mexican peso against the U.S. dollar following the U.S. presidential election in November 2016, although the peso returned to pre-election rates in this year's second quarter.respectively. Although sales in Argentina and South Africa are each less than 5% of our non-U.S. sales, exchange rate movements of those countries have alsothe rand has been volatile and significantly impacted sales from time to time. Translation of our international activities at average exchange rates in 2015 as compared to average rates in 2014 reduced sales by $516, with $268 attributable to a weaker euro and $91 to a weaker Brazil real. In 2016, weaker internationalInternational currencies reduced sales by another $173. A weaker Argentine peso, British pound, Mexican peso, South African rand and Brazilian real reduced sales by $70, $23, $19, $18 and $11, while the euro was relatively stable in 2016. With overall strengthening of international currenciesstrengthened against the U.S. dollar in 2017, the aggregate translation impact onfirst quarter of 2024, increasing sales has been modest. Nine-month 2017 sales were higher by $12 due to currency translation as compared to the same period in 2016, with a$3. A stronger euro and Brazilian real South African rand, Thai baht and Indian rupee beingwere partially offset by a weaker British pound,Chinese renminbi, Thai baht and South African rand.Chinese yuan. Based on our current sales and exchange rate outlook, which includes a somewhat stronger euro than previously forecast, we expect the full year 2017 impact of currency translation on sales to approximate $30. Our fourth-quarter 2017 outlook is based on an assumed euro/liabilities are remeasured into U.S. dollar rate of 1.15, a U.S. dollar/Brazil real rate of 3.4, a British pound/U.S. dollar rate of 1.30 and a U.S. dollar/Mexicanusing historic Argentine peso rate of 18.5. At sales levels in our current outlook for 2017, a 5% movement on the euro would impact our annual sales by approximately $90. A 5% change on the Brazil real, British pound, Mexican peso, Thailand baht and China yuan rates would impact our annual sales in each of those countries by approximately $10 to $20.Brazil MarketThe Brazil market is an important market for our Commercial Vehicle segment, representing about 18% of this segment's nine-month 2017 sales. Our medium/heavy truck sales in Brazil account for more than 75% of our total sales in the country. Reduced market demand resulting from the weak economic environment in Brazil in 2015 led to production levels in the light vehicle and medium/heavy duty truck markets that were lower by about 22% and 44% from 2014. Continued weakness in 2016 resulted in further reductions in medium/heavy truck production of about 20% and a light vehicle production decline of around 10%. As a consequence, sales by our operations in Brazil for 2016 approximated $200, down from about $500 in 2014. In response to the challenging economic conditions in this country, we implemented restructuring and other cost reduction actions the past two years and continue to trimexchange rates. to the extent practicable. As discussed in Note 2 to our consolidated financial statements in Item 1, we completed a transaction in December 2016 that provided us with the underlying assets and personnel supporting our pre-existing business with a supplier along with some incremental business. With this transaction, we have enhanced our competitive position in the market and should benefit significantly in future years as the Brazilian markets rebound. As indicated above, nine-month 2017 vehicle production levels in South America were higher than the same period of last year. Brazil was a significant contributor to that performance with light truck production in this year's first nine months being higher by about 34% and medium/heavy truck production being up about 24%. Although political developments create a degree of uncertainty, the nine-month 2017 performance is an indication perhaps of the onset of improving market conditions in Brazil.Commodity Costsbrass.rare earth materials. The effects of changes in commodity prices are reflected directly in our purchases of commodities and indirectly through our purchases of products such as castings, forgings, bearings, batteries and component parts that include commodities. Most of our major customer agreements provide for the sharing of significant commodity price changes with those customers.customers based on the movement in various published commodity indexes. Where such formal agreements are not present, we have historically been successful implementing price adjustments that largely compensate for the inflationary impact of material costs. Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes.Our costs Lower year-over-year commodity prices increased earnings during the first quarter of 2024 by $5. Material cost recovery pricing actions decreased earnings in the thirdfirst quarter and first nine of 2017 increased on a year-over-year basis2024 by approximately $17 and $36 due to higher commodity costs. In 2016, our third quarter and nine-month costs increased on a year-over-year basis by approximately $8 and $3 from increased commodity prices. Material recovery and other pricing actions increased third-quarter and nine-month 2017 sales by $8 and $12 on a year-over-year basis, whereas recovery actions increased third-quarter and nine-month sales in 2016 by $12 and $7.$10. 2017
Outlook 2016 2015 Sales ~$7,100 $ 5,826 $ 6,060 Adjusted EBITDA ~$835 $ 660 $ 652 Net cash provided by operating activities ~$550 $ 384 $ 406 Purchases of property, plant and equipment ~$400 $ 322 $ 260 Free Cash Flow ~$150 $ 62 $ 146 $ 10,555 $ 10,156 $ 845 $ 700 $500 - $550 $ 476 $ 649 ~4% of sales $ 501 $ 440 $50 - $100 $ (25 ) $ 209 Free Cash Flowfree cash flow are non-GAAP financial measures. See the Non-GAAP Financial Measures discussion below for definitions of our non-GAAP financial measures and reconciliations to the most directly comparable U.S. generally accepted accounting principles (GAAP) measures. We have not provided a reconciliation of our adjusted EBITDA outlook to the most comparable GAAP measure of net income. Providing net income guidance is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income, including restructuring actions, asset impairments and certain income tax valuation adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.Weaker international currencies relativethe U.S. dollar were the most significant factor reducing our sales$11,150, reflecting a modest improvement in 2016 and 2015 by $689. Adjusted for currency and divestiture effects, sales in these years were relatively comparable, with new customer programs largely offsetting the impacts of overall weaker end user demand across our global businesses. We experienced uneven end user markets, with some being relatively strong and others somewhat weak, and the conditions across the regions of the world differing quite dramatically. In 2017, the Brevini and USM acquisitions and overall stronger market demand are contributing to higher sales, with ourand $350 of net new business backlog contributing about $175. Asbacklog. Based on our current sales and exchange rate outlook for 2024, we progressed through this year's first nine months, sales benefited from strengthening market demandexpect overall stability in our global off-highway business, improving vehicle markets outside the U.S. and continued strong demand on key North America light truck programs. Whereas currency wasinternational currencies with a modest headwind to sales the past few years, it becameprimarily due to a tailwind in 2017 as the currencies in several international regions where we do business strengthened against the U.S. dollar. With another strongweaker euro, Chinese renminbi and Thai baht. At sales performance in this year's third quarter, we have increased our full year 2017 sales outlook to approximately $7,100.Adjusted EBITDA margin as a percent of sales remained relatively constant at around 11% in 2016 and 2015 despite certain markets being weak and volatile. Where practicable, we have aligned our cost with weaker demand levels in certain markets. We continue to focusour current outlook for 2024, a 5% movement on margin improvement through right sizing and rationalizingthe euro would impact our manufacturing operations, implementing other cost reduction initiatives and ensuring that customer programs are competitively priced. The operating leverage from increasedannual sales volumes is benefiting full year 2017 Adjusted EBITDA margin.by approximately $100. A 5% change on the Chinese renminbi, Indian rupee or Brazilian real rates would impact our annual sales in each of those countries by approximately $20. At our current sales outlook for 2024, we expect full year 20172024 adjusted EBITDA to approximate $875 to $975. Adjusted EBITDA Margin is expected to be approximately $835, an increase from8.5% at the midpoint of our July outlook of $790 to $820. Furtherguidance range, a 50 basis-point improvement over 2023, reflecting higher margin improvement beyond 2017 is anticipated as we expect increased end user demand in certain markets, benefit from additionalnet new business contributions from acquisition synergy actions and continuedimproving operational performance being partially offset by the benefit of the material cost discipline.We have generated positive free cash flowrecovery tailwind experienced in recent years while increasing capital spending2023 dissipating in 2024, as commodity prices stabilize, and increased investment to support organic business growth through launching new business with customers. Free cash flow in 2015 declined from the previous year dueour electrification strategy. We expect to lower earnings and increased capital spend to support new program launches, with lower cash taxes and restructuring payments providing a partial offset. Reduced free cash flow in 2016 was primarily attributable to our continued success in being awarded significant new customer programs. Although many of the recent program wins are not scheduled to begin production until 2018, these programs required capital investment beginning in 2016. As such, cash used for capital investments in 2016 was $62 higher than in 2015. An elevated level of capital spending has continued into the current year with an expectation that higher spending for new program launches will dissipate after 2017. Such expenditures are expected to approximate $400 in 2017, consistent with our prior outlook of $380 to $420. The USM transaction resulted in first-quarter 2017 free cash flow being reduced by $25 as a portion of the cash paid at closing was treated as having effectively settled trade payables owed to USM for product purchases prior to the acquisition. Higher earnings are currently expected to more than offset the increased capital spending and USM trade payable settlement, resulting in full year 2017generate free cash flow of approximately $150, exceeding our July outlook of $80 to $120.Among our Operational and Strategic Initiatives are increased focus on and investment in product technology – delivering products and technology that are key to bringing solutions to issues of paramount importance to our customers. Our success on this front is measured, in part, by our sales backlog – net new business received that will be launching in the future and adding to our base annual sales. This backlog excludes replacement business and represents incremental sales associated with new programs for which we have received formal customer awards. At December 31, 2016, our sales backlog of net new business for the 2017 through 2019 period was $750, comparable to our three-year sales backlog$75 at the endmidpoint of 2015, with new business wins that added sales approximating $150our guidance range reflecting the benefit of higher year-over-year adjusted EBITDA and lower capital spending being largely offset by reductionshigher year-over-year cash paid for interest and income taxes and increased working capital to the backlog to reflect the effectssupport higher sales levels.(Third(First Quarter, 20172024 versus 2016 ) Three Months Ended September 30, 2017 2016 Dollars % of
Net Sales Dollars % of
Net Sales Increase/
(Decrease)Net sales $ 1,831 $ 1,384 $ 447 Cost of sales 1,562 85.3 % 1,176 85.0 % 386 Gross margin 269 14.7 % 208 15.0 % 61 Selling, general and administrative expenses 125 6.8 % 99 7.2 % 26 Amortization of intangibles 4 2 2 Restructuring charges, net 2 17 (15 ) Other income, net 1 6 (5 ) Earnings before interest and income taxes 139 96 43 Loss on extinguishment of debt (13 ) (13 ) Interest income 3 3 — Interest expense 25 27 (2 ) Earnings before income taxes 104 72 32 Income tax expense 33 13 20 Equity in earnings of affiliates 2 2 — Net income 73 61 12 Less: Noncontrolling interests net income 3 4 (1 ) Less: Redeemable noncontrolling interests net income 1 1 Net income attributable to the parent company $ 69 $ 57 $ 12 $ 2,735 $ 2,644 $ 91 2,491 91.1 % 2,415 91.3 % 76 244 8.9 % 229 8.7 % 15 139 5.1 % 140 5.3 % (1 ) 3 3 — 5 1 4 (29 ) (29 ) 2 5 (3 ) 70 90 (20 ) 4 4 — 39 34 5 35 60 (25 ) 37 30 7 2 1 1 — 31 (31 ) 5 4 1 (8 ) (1 ) (7 ) $ 3 $ 28 $ (25 ) Three Months Ended
September 30, Amount of Change Due To 2017 2016 Increase/(Decrease) Currency Effects Acquisitions (Divestitures) Organic Change North America $ 926 $ 726 $ 200 $ 3 $ 36 $ 161 Europe 537 373 164 21 78 65 South America 137 94 43 (3 ) 14 32 Asia Pacific 231 191 40 7 5 28 Total $ 1,831 $ 1,384 $ 447 $ 28 $ 133 $ 286 Increase/ (Decrease) Acquisitions (Divestitures) $ 1,327 $ 1,183 $ 144 $ 1 $ — $ 143 875 920 (45 ) 6 (51 ) 184 168 16 5 11 349 373 (24 ) (9 ) (15 ) $ 2,735 $ 2,644 $ 91 $ 3 $ — $ 88 thirdfirst quarter of 20172024 were $447$91 higher than in 2016.2023. Stronger international currencies increased sales by $28. The acquisitions of BFP, BPT, SIFCO$3, principally due to a stronger euro and USM – Warren in 2016Brazilian real, partially offset by a weaker Chinese renminbi, Thai baht and 2017 generated a quarter-over-quarter increase in sales of $145, with the divestiture of Nippon Reinz resulting in a reduction of $12.South African rand. The organic sales increase of $286$88, or 3%, resulted primarily from stronger light truck markets, strengthening global off-highway demand,having a full quarter of production on a full-frame light-truck customer program that launched and was ramping up production in the first quarter of last year, higher medium/heavy trucklight-vehicle engine production levelsvolumes in North America and contributions from new business.22%12% was driven principally by strongerhaving a full quarter of production levels on certaina full-frame light-truck customer program that launched and was ramping up production in the first quarter of our key light truck programs, with stronger medium/heavy trucklast year, higher light-vehicle engine production levels and off-highway demand also contributing. principally from a stronger euro and British pound, and the increase in sales of $78 attributable to the BFP and BPT acquisitions, third-quarter 2017 sales in Europe were 17% higher thandown 6% compared with 2023. With our significant Off-Highway presence in 2016.the region, weaker construction/mining and agricultural equipment markets were a major factor. Organic sales growth in this year's third quarter benefited primarily from improving demand levels in our off-highway and medium/heavy duty truck markets.South America sales inoperating segment were down 7% compared with the thirdfirst quarter of 2017 benefited from the SIFCO and BPT acquisitions.2023. Excluding this impact and currency effects, sales in South America were up 34% from the last year's third quarter. The organic sales increase in the region was driven largely by stronger production levels,7% compared with light2023, reflecting improved medium- and heavy-duty truck production up about 30% and medium/heavy truck production higher by 32%.sales in this year's third quarter were increased by $17 with the BPT and BFP acquisitions and reduced by $12 as a resultdecreased 4% compared to 2023, reflecting lower electric vehicle related product sales.thirdfirst quarter of 20172024 increased $386,$76, or 33%3%, when compared to 2016. Similar to the factors affecting sales, the increase was primarily due to higher overall sales volumes and the inclusion of acquired businesses.2023. Cost of sales as a percent of sales in 2017 was 3020 basis points higherlower than in the previous year. CostIncremental margins provided by increased sales volumes, higher material cost savings of sales attributed to net acquisitions approximated $112 or 84.2%$35, lower premium freight costs of the sales$15, lower warranty expense of those businesses. Excluding the effects$6, lower commodity costs of acquisitions$5 and divestitures, cost of sales as a percent of sales was 85.4%, 40 basis points lower than the third quarter of 2016. Higher material commodity prices increased year-over-year third-quarter cost of sales by $17. Increased start-up andprogram launch costs of $8 also negatively impacted this year's third quarter compared to last year. Higher levels$3 were partially offset by non-material inflationary cost impacts of capital$45, higher spending to support new business programs also increased year-over-year depreciationon electrification initiatives of $10, operational inefficiencies of $9 and unfavorable product mix. Commodity costs are primarily driven by $4. Partially offsetting these increased costs were material cost reduction initiatives that generated third-quarter savingscertain grades of $14. Excluding these impacts, cost of sales of the organic business would have been 84.5%, a 50 basis point improvement compared to last year's third quarter, reflecting in part the benefit from overallsteel and aluminum. Non-material inflation includes higher sales volume.$269$244 for 2017the first quarter of 2024 increased $61$15 from 2016.2023. Gross margin as a percent of sales was 14.7%8.9% in 2017, 30the first quarter of 2024, 20 basis points lowerhigher than in 2016. Acquisitions net of divestitures added $21 of2023. The improvement in gross margin. The margin reduction as a percent of sales was driven principally by the cost of sales factors referenced above.2017the first quarter of 2024 were $125 (6.8%$139 (5.1% of sales) as compared to $99 (7.2%$140 (5.3% of sales) in 2016. SG&A attributed to net acquisitions was $15. Excluding the increase associated with acquisitions and divestitures, first quarter of 2023. SG&A expenses as a percentwere $1 lower in the first quarter of sales were 70 basis points2024 with higher salaried employee wages and incentive compensation and increased software technology investments being offset by lower than the same period of 2016. The year-over-year third-quarter increase of $11 exclusive of net acquisitions was primarily attributable to increased salaryprovisions for doubtful accounts and benefits expenses of $19, primarily relating to increased compensation expense resulting from better performance in relation to incentive targets in 2017. Partially offsetting this increase was lower selling costsprofessional services and other discretionary spending of $8.The increase of $2 in amortizationAmortization expense was primarily attributable to amortization$3 in both the first quarter of the intangibles acquired in the acquisitions completed in late 20162024 and the first quarter of 2017.Restructuring charges — Restructuring charges in the third quarter2023. See Note 3 of 2017 included $1 for severance and benefit costs and $1 of exit costs primarily from previously announced initiatives. Last year's third quarter charges included approved plans to implement certain headcount reduction initiatives, primarily in our Off-Highway business. Including costs associated with this action and other previously announced initiatives, restructuring expense during the third quarter of 2016 included $16 of severance and benefit costs and $1 of exit costs.Other income, net — The following table shows the major components of Other income, net. Three Months Ended
September 30, 2017 2016 Government grants and incentives $ 2 $ 2 Foreign exchange loss (2 ) Strategic transaction expenses (3 ) (3 ) Gain on sale of marketable securities 7 Other 2 2 Other income, net $ 1 $ 6 Loss on extinguishment of debt — As discussed in Note 12 to our consolidated financial statements in Item 1 of Part I we redeemedfor additional information.remaining $350 of our September 2021 Notes during the thirdfirst quarter of 2017. We incurred redemption premiums of $10 in connection with this repayment2024 and wrote off $3 of previously deferred financing costs associated with the debt that was extinguished.Interest income and interest expense — Interest income was $3 in both 2017 and 2016. Interest expense was $25 in 2017 and $27 in 2016. A lower average interest rate on borrowings was partially offset by higher average debt levels in 2017. Average debt levels were higher$1 in the thirdfirst quarter of 2017 than in last year's third quarter, in part due to debt2023. See Note 4 of $182 assumed in connection with the acquisition of BFP and BPT. As discussed in Note 12 to our consolidated financial statements in Item 1 of Part I since May 2016,for additional information.completed several financing transactions whichentered into a definitive agreement to sell our European hydraulics business to HPIH S.à r.l. for approximately $40. The sale price is subject to adjustment based on net working capital and net financial position balances as of the closing date. We classified the disposal group as held for sale, recognizing a $29 loss to adjust the carrying value of net assets to fair value less estimated costs to sell. See Note 2 of our consolidated financial statements in combinationItem 1 of Part I for additional information. $ (4 ) $ (3 ) 1 1 1 4 (2 ) (1 ) 6 4 $ 2 $ 5 cross-currency swaps effectively resulted acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs, and other strategic initiatives. Strategic transaction expenses in euro-denominated obligations at lowerthe first quarter of 2024 and 2023 were primarily attributable to investigating potential acquisitions and business ventures and other strategic initiatives.rates.expense — Interest income was $4 in both the first quarter of 2024 and the first quarter of 2023. Interest expense increased from $34 in the first quarter of 2023 to $39 in the first quarter of 2024, due to higher interest rates on outstanding borrowings. Average effective interest rates, in the third quarters of 2017 and 2016, inclusive of amortization of debt issuance costs, approximated 5.4%5.8% in the first quarter of 2024 and 6.3%.IncomeWe reported income tax expense of $37 and $30 for the thirdfirst quarter was $33 in 2017of 2024 and $13 in 2016, resulting in2023, respectively. Our effective tax rates were 106% and 50% for the first quarter of 32%2024 and 18%. The2023, respectively. During the first quarter of 2024, we recorded tax expense of $11 for valuation allowances related to foreign locations. Our effective income tax rates vary from the U.S. federal statutory rate of 35% primarily21% due to establishment, release and adjustment of valuation allowances in several countries nondeductible expenses,outside the U.S., different statutory tax rates outside the U.S. and withholding taxes. Jurisdictions withtaxes related to repatriations of international earnings. The effective tax rates lower than the U.S.income tax rate of 35% decreased the overall effective rate in both years. At September 30, 2016, we were carrying a valuation allowance against U.S. deferred tax assets. During the third quarter of 2016, we generated incomemay vary significantly due to fluctuations in the U.S. which had the effectamounts and sources, both foreign and domestic, of reducing our effective tax rate as the tax expense on thatpretax income was offset by a corresponding reduction of the valuation allowance. Partially offsetting the reduced effective rate in 2016 attributable to U.S. income was $2 of amortization of a prepaid tax asset related to an intercompany transaction completed in 2015. As disclosed in Note 1 of the consolidated financial statements in Item 1 of Part I, we adopted new accounting guidance in 2017 which resultedand changes in the prepaid tax asset at the beginningamounts of 2017 being written off directly to retained earnings. Accordingly, there is no amortization expense related to the prepaid tax asset in 2017.In countries where our history of operating losses did not allow us to satisfy the “more likely than not” criterion for recognition of deferred tax assets, we have generally recognized no income tax on the pre-tax income or losses as valuation allowance adjustments offset the associated tax effects. Following the release of valuation allowances on our U.S. deferred tax assets in the fourth quarter of 2016, tax effects relating to U.S. income in 2017 are no longer being offset by adjustments to the valuation allowance. We believe that it is reasonably possible that a valuation allowance of up to $12 related to a subsidiary in Argentina will be released in the next twelve months.both 2017the first quarter of 2024 and 2016. Equity in earnings from Bendix Spicer Foundation Brake, LLC (BSFB) was $1 in 2017 and $2 in 2016. Equity inthe first quarter of 2023. Net earnings from Dongfeng Dana Axle Co., Ltd. (DDAC) was $1 in 2017 andwere de minimis in 2016.Noncontrolling interests net income — The decreased level of earnings attributable to noncontrolling interests is generally attributable to lower earnings of the consolidated operations that are less than wholly-owned. The redeemable noncontrolling interest relates to the BFP and BPT business we acquired in the first quarter of 2017 on which we have a call option as described more fully in Note 22024 and the first quarter of the consolidated financial statements in Item 12023.Summary Consolidated(Year-to-Date, 2017(2024 versus 2016) Nine Months Ended September 30, 2017 2016 Dollars % of
Net Sales Dollars % of
Net Sales Increase/
(Decrease)Net sales $ 5,372 $ 4,379 $ 993 Cost of sales 4,564 85.0 % 3,739 85.4 % 825 Gross margin 808 15.0 % 640 14.6 % 168 Selling, general and administrative expenses 379 7.1 % 303 6.9 % 76 Amortization of intangibles 9 6 3 Restructuring charges, net 14 23 (9 ) Other income (expense), net (8 ) 9 (17 ) Earnings before interest and income taxes 398 317 81 Loss on extinguishment of debt (19 ) (17 ) (2 ) Interest income 8 8 — Interest expense 79 84 (5 ) Earnings before income taxes 308 224 84 Income tax expense 94 66 28 Equity in earnings of affiliates 12 6 6 Net income 226 164 62 Less: Noncontrolling interests net income 13 9 4 Less: Redeemable noncontrolling interests net loss (2 ) (2 ) Net income attributable to the parent company $ 215 $ 155 $ 60 Sales — The following table shows changes in our2023) $ 962 $ 49 5.1 % 113 28 27 (9 ) (4 ) (1 ) $ 1,098 $ 67 6.1 % by geographic region. Nine Months Ended
September 30, Amount of Change Due To 2017 2016 Increase/
(Decrease) Currency Effects Organic Change North America $ 2,781 $ 2,329 $ 452 $ (3 ) $ 91 $ 364 Europe 1,584 1,231 353 209 144 South America 371 251 120 7 38 75 Asia Pacific 636 568 68 8 14 46 Total $ 5,372 $ 4,379 $ 993 $ 12 $ 352 $ 629 Sales in the first nine monthsquarter of 20172024, exclusive of currency effects, were $99315% higher than 2023 reflecting mixed global markets, having a full quarter of production on a full-frame light-truck customer program that launched and was ramping up production in 2016. Stronger international currenciesthe first quarter of last year, the conversion of sales backlog and the benefit of net customer pricing and cost recovery actions. Year-over-year North America full-frame light-truck production was flat in this year’s first quarter while light-truck production in Asia Pacific increased sales by $12. The acquisitions of BFP, BPT, SIFCO, USM – Warren and Magnum in 2016 and 2017 generated a year-over-year increase in sales of $386, with the divestiture of Nippon Reinz resulting in a reduction of $34. The organic sales increase of $629 resulted primarily from stronger light truck markets, strengthening global off-highway demand, stronger medium/heavy truck markets2%. Year-over-year light-truck production in Europe and South America both decreased 3% in this year’s first quarter. Net customer pricing and contributions from new business.North America organic sales increase of 16%year-over-year performance-related earnings decrease was driven principally by stronger production levelsinflationary cost increases of $44, higher spending on certainelectrification initiatives of our key light truck programs. Stronger medium/heavy truck production$11, operational inefficiencies of $5, commodity cost increases of $4 and off-highway demand levels also contributed to higher organic sales.Excluding currency effectsincentive compensation expense of $1. Partially offsetting these performance-related earnings decreases were net customer pricing and the increase in salescost recovery actions of $209 attributable to the BFP and BPT acquisitions, nine-month 2017 sales in Europe were 12%$27, higher than in 2016. As a result of improving market conditions in Europe, each of our operating segments experienced increased organic sales, primarily from higher production/demand levels.South America sales in this year's first nine months benefited from a stronger Brazil real and increased sales from the SIFCO and BPT acquisitions. Excluding these effects, sales were up 30% from the first nine months of 2016. The organic sales increase in the region was driven largely by stronger production levels, with light truck production up about 27% and medium/heavy truck production higher by 21%.Asia Pacific sales in the first nine months of 2017 were 12% higher than the same period of 2016. Sales increased by $48 from the BPT and BFP acquisitions, more than offsetting the $34 reduction attributable to the Nippon-Reinz divestiture. The organic sales increase of 8% in this region was due primarily to stronger light vehicle production levels and off-highway market demand, along with contributions from new customer programs.Cost of sales and gross margin — Cost of sales for the first nine months of 2017 increased $825, or 22%, when compared to 2016. Similar to the factors affecting sales, the increase was primarily due to higher overall sales volumes and the inclusion of acquired businesses. Cost of sales as a percent of 2017 sales was 40 basis points lower than in the previous year. Cost of sales attributed to net acquisitions, which included $14 of incremental cost assigned to inventory as part of business combination accounting, amounted to $304, or 86.4% of the sales of those businesses. Excluding the effects of acquisitions and divestitures, cost of sales as percent of sales declined from 85.4% of sales in the first nine months of 2016 to 84.9% of sales in 2017 – a reduction of 50 basis points. This reduction in cost of sales as a percent of sales was largely attributable to better cost absorption as the higher sales volume prompted increases in manufacturing activity. Cost of sales also benefited from material cost savings of approximately $44 and a reduction in$13, lower premium freight costs of $7, lower warranty expense of $7, which more than offset an increase in material commodity prices of $36$5 and start-up/lower program launch costs of $22.Gross margin of $808 for 2017 increased $168 from 2016. Gross margin as a percent of sales was 15.0% in 2017, 40 basis points higher than in 2016. Acquisitions net of divestitures added $48 of gross margin. The margin improvement as a percent of sales was driven principally by the cost of sales factors referenced above.Selling, general and administrative expenses (SG&A) — SG&A expenses in 2017 were $379 (7.1% of sales) as compared to $303 (6.9% of sales) in 2016. SG&A attributed to net acquisitions was $48. Excluding the increase associated with acquisitions and divestitures, SG&A expenses as a percent of sales were 6.6% of sales, 30 basis points lower than the same period of 2016. The $28 year-over-year nine-month increase exclusive of net acquisitions was principally due to increased salary and benefits expenses of $34 primarily relating to increased compensation expense resulting from better performance in relation to incentive targets in 2017. Selling costs and other discretionary spending was $6 lower than last year's first nine months.Amortization of intangibles — The increase of $3 in amortization expense was primarily attributable to amortization of the intangibles acquired in the acquisitions completed in late 2016 and the first quarter of 2017.Restructuring charges — Restructuring charges of $14 in 2017 include $8 for employee separation costs attributable to headcount reductions in our Off-Highway segment as part of the BPT and BFP acquisition integration actions. Remaining amounts in 2017 primarily relate to previously announced restructuring actions. Last year's restructuring charges included $14 of costs attributable to headcount reductions in our Off-Highway segment, with remaining amounts attributable to the planned closure of our $4. $ 522 $ 17 3.3 % (9 ) (16 ) 7 16 4 $ 524 $ 17 3.2 % manufacturing facility in Glasgow, Kentucky, headcount reduction actions at our corporate facilities in the U.S. and employee separation and exit costs associated with previously announced actions.Other income (expense), net — The following table shows the major components of Other income (expense), net. Nine Months Ended
September 30, 2017 2016 Government grants and incentives $ 6 $ 5 Foreign exchange loss (3 ) (4 ) Strategic transaction expenses (20 ) (6 ) Gain on sale of marketable securities 7 Insurance recoveries 1 Amounts attributable to previously divested/closed operations 3 1 Other 6 5 Other income (expense), net $ (8 ) $ 9 The higher level of strategic transaction expenses in 2017 is primarily attributable to the Brevini and USM transactions which were completedsales in the first quarter of 2017. Amounts attributable to previously divested/closed operations2024, exclusive of currency effects, were flat with 2023 reflecting mixed global markets, the conversion of sales backlog and the benefit of net customer pricing and cost recovery actions. Year-over-year Class 8 production in 2017 includes the receipt of the remaining proceeds on our December 2016 divestiture of DCLLC. See Note 17 to our consolidated financial statements in Item 1 of Part I for additional information.Loss on extinguishment of debt — As discussed in Note 12 to our consolidated financial statements in Item 1 of Part I, we redeemed $100 of our September 2021 Notes, repaid indebtedness of our BPT and BFP subsidiaries and repaid certain bank debt in Brazil during the second quarter of 2017, and we redeemed the remaining $350 of our September 2021 NotesNorth America was down 2% while Classes 5-7 was down 3% in this year's thirdyear’s first quarter. We incurred redemption premiums of $15Year-over-year medium/heavy-truck production in connection with these repayments and wrote off $4 of previously deferred financing costs associated with the debt thatEurope was extinguished. In last year's second quarter, we redeemeddown 15% while medium/heavy-truck production in South America was up 17%. Year-over-year our February 2021 Notes, incurring a redemption premium of $12, and also restructured our domestic revolving credit facility. In connection with these transactions, we wrote off $5 of previously deferred financing costs.Interest income and interest expense — Interest income was $8sales in both 2017 and 2016. Interest expense was $79 in 2017 and $84 in 2016. A lower average interest rate on borrowings was offset by higher average debt levels in 2017. Average debt levels were higher in the first nine months of 2017 versus the same period last year, in partAsia Pacific decreased due to debtlower electric-vehicle product orders. Net customer pricing and cost recovery actions increased year-over-year sales by $7.$182 assumed in connection with the acquisition$8, net customer pricing and cost recovery actions of BFP$7, higher material cost savings of $7 and BPT. As discussed in Note 12 to our consolidated financial statements in Item 1lower premium freight costs of Part I, we completed several financing transactions since May 2016 which in combination with cross-currency swaps effectively resulted in euro-denominated obligations at lower interest rates. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.6% and 6.4% in 2017 and 2016.Income tax expense — Income tax expense for the first nine months was $94 in 2017 and $66 in 2016, resulting in effective tax rates of 31% and 29%. The effective income tax rates vary from the U.S. federal statutory rate of 35% primarily due to valuation allowances in several countries, nondeductible expenses, different statutory rates outside the U.S. and withholding taxes. Jurisdictions with effective tax rates lower than the U.S. tax rate of 35% decreased the overall effective rate in both years. Jurisdictions with valuation allowances had pre-tax income in 2016 which decreased the overall effective tax rate.$5. Partially offsetting this impact in 2016 was $8these performance-related earnings increases were operational inefficiencies of amortization$7, inflationary cost increases of a prepaid tax asset related to an intercompany transaction completed in 2015. As disclosed in Note 1$2, higher warranty expense of the consolidated financial statements in Item 1$1 and higher program launch costs of Part I, we adopted new accounting guidance in 2017 which resulted in the prepaid tax asset at the beginning$1.In countries where our history of operating losses does not allow us to satisfy the “more likely than not” criterion for recognition of deferred tax assets, we have generally recognized no income tax on the pre-tax income or losses as valuation allowance adjustments offset the associated tax effects. Following the release of valuation allowances on our U.S. deferred tax assets in the fourth quarter of 2016, tax effects relating to U.S. income in 2017 are no longer being offset by adjustments to the valuation allowance. We believe that it is reasonably possible that a valuation allowance of up to $12 related to a subsidiary in Argentina will be released in the next twelve months.Equity in earnings of affiliates — Net earnings from equity investments was $12 in 2017 compared with $6 in 2016. Equity in earnings from BSFB was $8 in 2017 and $7 in 2016. Equity in earnings from DDAC was $4 in 2017, inclusive of a $3 charge for asset transfer and conversion of certain assets, and negligible in 2016.Noncontrolling interests net income — The increased level of earnings attributable to noncontrolling interests is generally attributable to increased earnings of the consolidated operations that are less than wholly-owned. The redeemable noncontrolling interest relates to the Brevini business we acquired $ 842 $ 118 14.0 % (55 ) (17 ) (8 ) 14 2 $ 781 $ 115 14.7 % 2017 on which we have a call option as described more fully in Note 2 of the consolidated financial statements in Item 1 of Part I.Segment Results of Operations (2017 versus 2016)Light Vehicle Three Months Nine Months Sales Segment
EBITDA Segment
EBITDA
Margin Sales Segment
EBITDA Segment
EBITDA
Margin2016 $ 631 $ 73 11.6 % $ 1,913 $ 202 10.6 % Volume and mix 135 30 380 75 Acquisition 28 3 69 9 Performance 6 (16 ) 11 (8 ) Currency effects 5 1 (4 ) (5 ) 2017 $ 805 $ 91 11.3 % $ 2,369 $ 273 11.5 % Light Vehicle sales in the third quarter of 2017,2024, exclusive of currency effects, were 7% lower than 2023 reflecting softening global markets and the increased sales from the acquisitionimpact of USM – Warren on March 1 of this year, were 22% higher than last year, with nine-month year-over year sales up 20%. The volume-related sales increase was driven primarily by stronger production levels, content increases and favorable model mix on certain of our significant full frame light truck programs in North America, resulting in sales growth that exceeded overall higher North America full frame light truck production of 1% and 3% compared with last year's third quarter and first nine months. Nine-month sales in this segment also benefited from newnet customer programs, including the transfer of a program previously supported by our Commercial Vehicle segment that moved to Light Vehicle in mid-2016 when the axle used to support the program was replaced with an axle produced by the Light Vehicle segment. This program increased Light Vehicle year-over year nine-month 2017 sales by approximately $50. Stronger light truck production levels in Europe, South America and Asia Pacific also contributed to higher sales volumes. Customer pricing and cost recovery impacts increasedactions, partially offset by the conversion of sales backlog. Year-over-year global construction/mining equipment and agricultural equipment markets are showing signs of softening, especially in Europe. Year-over-year first quarter construction/mining equipment and agricultural equipment production in Europe were down 10% and 15%, respectively. Net customer pricing and cost recovery actions decreased year-over-year third quarter and nine-month sales by $6 and $11.Light Vehicle$8.increaseddecreased by $18 and $71 in this year's third quarter and first nine months when compared$3 comparted to the same periods of 2016. Higherprior year. Lower sales volumes provided a benefit of $30 and $75, while the acquisition of USM – Warren contributed $3 and $9.decreased year-over-year earnings by $17 (31% decremental margin). The year-over-year performance-related earnings reduction in the third quarterincrease was driven by $8 of increased commodity costs and $8 of incremental new program start-up and launch-related costs, with increased incentive compensation and other operating costs also reducing segment earnings. Partially offsetting these higher costs were pricing and material recovery actions that increased segment EBITDA by $6 and material cost initiatives that provided increased savings of $4. Performance-related earnings for the first nine months$9, commodity cost decreases of this year were $8$7, lower than the same periodwarranty expense of 2016. Increased commodity$2, lower premium freight costs of $17$2, operational efficiencies of $2 and start-up and launch costsnon-material cost decreases of $22$1. These performance-related earnings increases were partially offset by improved earnings of $11 fromnet customer pricing and materialcost recovery actions of $8 and savings of $19 from material cost reduction initiatives.Commercial Vehicle Three Months Nine Months Sales Segment
EBITDA Segment
EBITDA
Margin Sales Segment
EBITDA Segment
EBITDA
Margin2016 $ 294 $ 23 7.8 % $ 976 $ 81 8.3 % Volume and mix 55 14 24 8 Acquisition 12 3 32 Performance 4 (7 ) 10 8 Currency effects 6 15 (6 ) 2017 $ 371 $ 33 8.9 % $ 1,057 $ 91 8.6 % Currency effects which increased sales in the third quarter and first nine months of 2017 were primarily due to a year-over-year stronger Brazil real, with a stronger euro also contributing to the third quarter impact. The increased sales from acquisition in the year-over year 2017 periods relates to the purchase of SIFCO business late in 2016. After adjusting for the effects of currency and acquisitions, year-over-year 2017 sales in our Commercial Vehicle segment increased 20% in this year's third quarter and 3% for the nine-month period. The volume-related increase was primarily attributable to higher production levels in North America, where third-quarter and nine-month Class 8 production was up 29% and 3% and Classes 5-7 production was up 14% and 6%. Also contributing to the higher sales volume was third-quarter and nine-month production increases of 32% and 21% in South America and 3% and 4% in Europe. Partially offsetting the increased production levels in the nine-month periodwas the transfer of a program having sales of about $50 to the Light Vehicle segment which began supplying the axle for the program in mid-2016.Commercial Vehicle year-over-year segment EBITDA increased by $10 in both the third-quarter and nine-month periods of this year. Although sales benefited from currency translation, segment EBITDA was minimal in the third quarter and negatively impacted by currency transaction losses in the nine-month period. Higher sales volumes increased 2017 third-quarter and nine-month 2017 earnings by $14 and $8. Higher commodity costs decreased third quarter performance-related earnings by $4, with increased incentive compensation expense and other net cost increases reducing earnings by $10. Material recovery pricing actions of $4 and savings from material cost reduction initiatives of $3 provided a partial offset. Performance-related EBITDA for this year's first nine months benefited by $10 from pricing and material recovery actions, $7 from lower warranty expense and $8 of material cost savings, more than offsetting higher material commodity costs of $8 and other increased costs of $9.Off-Highway Three Months Nine Months Sales Segment
EBITDA Segment
EBITDA
Margin Sales Segment
EBITDA Segment
EBITDA
Margin2016 $ 199 $ 28 14.1 % $ 692 $ 97 14.0 % Volume and mix 70 14 136 27 Acquisition 105 12 284 30 Performance — (5 ) 3 Currency effects 10 1 2017 $ 384 $ 55 14.3 % $ 1,107 $ 157 14.2 % A stronger euro contributed to the third quarter sales increase. Over the nine-month period, compared to 2016 the euro was relatively stable. The increased sales from acquisition resulted from the purchase of the Brevini BPT and BFP operations on February 1, 2017. After adjusting for these two items, year-over-year sales in this year's third quarter and first nine months were higher by 35% and 19% compared to 2016, primarily from higher global end-market demand.Off-Highway segment EBITDA increased by $27 in this year's third quarter and by $60 in this year's first nine months compared with the same periods of 2016. The BPT and BFP acquisitions contributed $12 and $30 of the year-over-year increases. Performance-related earnings in this year's third quarter and nine-month period resulted principally from year-over-year material cost savings of $4 in the third quarter and $9 for the first nine months, which offset reduced customer pricing and other items. Three Months Nine Months Sales Segment
EBITDA Segment
EBITDA
Margin Sales Segment
EBITDA Segment
EBITDA
Margin2016 $ 260 $ 42 16.2 % $ 798 $ 120 15.0 % Volume and mix 18 7 77 25 Divestiture (12 ) (33 ) (2 ) Performance (2 ) (9 ) (4 ) (11 ) Currency effects 7 1 1 2017 $ 271 $ 41 15.1 % $ 839 $ 132 15.7 % $ 318 $ 23 7.2 % 4 9 4 1 $ 332 $ 27 8.1 % light vehiclelight-vehicle market but also sells product to the medium/heavy truckheavy-truck and off-highway markets. NetPower Technologies sales in the first quarter of 2024, exclusive of currency effects, were 4% higher than 2023, reflecting mixed global markets, the conversion of sales backlog and the lower sales from the Nippon Reinz divestitureimpact of net customer pricing actions. Year-over-year light vehicle engine products was up 2% in the fourthNorth America and down 3% in Europe. In addition, our first quarter of 2016, sales in the third quarterEurope were impacted by lower electric-vehicle product orders. Net customer pricing and first nine months of 2017cost recovery actions increased 6% and 9%, primarily due to overall stronger market demand and new customer programs.Segmentyear-over-year sales by $9.in this year's third quarter was lowerincreased by $1 when$4 compared to the same periodprior year. The EBITDA benefit of 2016, with nine-month year-to-date segmenthigher sales volumes was offset by unfavorable product mix. The year-over-year performance-related earnings up $12. A reduction of $9 in year-over-year third quarter performance-related earningsincrease was driven by higher commodity costs of $3,net customer pricing reductionsand cost recovery actions of $9, higher material cost savings of $6, commodity cost decreases of $2 and other net cost increases of $4. For thecomparative nine-month period, higher commoditylower premium freight costs of $9, customer pricing reductions of $4 and other net cost$1. These performance-related earnings increases of $6 were partially offset by savings from materialoperational inefficiencies of $12 and inflationary cost reduction initiativesincreases of $8.$2. Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Net income $ 73 $ 61 $ 226 $ 164 Equity in earnings of affiliates 2 2 12 6 Income tax expense 33 13 94 66 Earnings before income taxes 104 72 308 224 Depreciation and amortization 62 48 172 136 Restructuring 2 17 14 23 Interest expense, net 22 24 71 76 Other* 26 7 73 35 Adjusted EBITDA $ 216 $ 168 $ 638 $ 494 $ — $ 31 2 1 37 30 35 60 106 97 5 1 35 30 8 29 13 8 $ 223 $ 204 * distressed supplier costs, amounts attributable to previously divested/closed operations, acquisition related inventory adjustments and other items. See Note 18 to our consolidated financial statements in Item 1 of Part I for additional details.this measurefree cash flow is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Free cash flow is neithernot intended to represent nor be an alternative to the measure of net cash provided by operating activities reported underin accordance with GAAP. Free cash flow may not be comparable to similarly titled measures reported by other companies. $ (102 ) $ (170 ) (70 ) (120 ) $ (172 ) $ (290 ) Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 Net cash provided by operating activities $ 181 $ 42 $ 361 $ 182 Purchases of property, plant and equipment (82 ) (68 ) (251 ) (198 ) Free cash flow $ 99 $ (26 ) $ 110 $ (16 ) September 30, 2017:Cash and cash equivalents $ 558 Less: Deposits supporting obligations (6 ) Available cash 552 Additional cash availability from Revolving Facility 579 Marketable securities 38 Total liquidity $ 1,169 Cash deposits are maintained to provide credit enhancement for certain agreementsMarch 31, 2024: $ 351 — 351 1,126 $ 1,477 are reported as part$9 of cash and cash equivalents. For most of these deposits, the cash may be withdrawn if a comparable security is provided in the form ofoutstanding letters of credit. Accordingly, these deposits are not considered to be restricted.Marketable securities are included as a component of liquidity as these investments can be readily liquidated at our discretion.September 30, 2017March 31, 2024 consolidated cash balance were as follows: U.S. Non-U.S. Total Cash and cash equivalents $ 87 $ 312 $ 399 Cash and cash equivalents held as deposits 6 6 Cash and cash equivalents held at less than wholly-owned subsidiaries 3 150 153 Consolidated cash balance $ 90 $ 468 $ 558 $ — $ 240 $ 240 3 108 111 $ 3 $ 348 $ 351 significantly restrict the ability of our operations to repatriate this cash. Beyond these restrictions, there are practical limitations on repatriation of cash from certain subsidiaries because of the resulting tax withholdings and subsidiary by-law restrictions which could limit our ability to access cash and other assets.The principal sources of liquidity available for our future cash requirements are expected to be (i) cash flows from operations, (ii) cash and cash equivalents on hand and (iii) borrowings from our Revolving Facility. We believe that our overall liquidity and operating cash flow will be sufficient to meet our anticipated cash requirements for capital expenditures, working capital, debt obligations, common stock repurchases and other commitments during the next twelve months. While uncertainty surrounding the current economic environment could adversely impact our business, based on our current financial position, we believe it is unlikely that any such effects would preclude us from maintaining sufficient liquidity.In April 2017, Dana Financing Luxembourg S.à r.l. (DFL) completed the issuance of $400 of its April 2025 Notes. Net proceeds of the offering totaled $394. The proceeds from the offering were used to repay indebtedness of our BPT and BFP subsidiaries, repay indebtedness of a wholly-owned subsidiary in Brazil, redeem $100 of our September 2021 Notes and for general corporate purposes. The September 2021 Notes were redeemed on April 4, 2017 at a price equal to 104.031% plus accrued and unpaid interest.On August 17, 2017, we entered into an amended credit and guaranty agreement comprised of a $275 term facility (the Term Facility) and a $600 revolving credit facility (the Revolving Facility) both of which mature on August 17, 2022. On September 14, 2017, we drew the entire amount available under the Term Facility. Net proceeds from the Term Facility draw totaled $274. The proceeds from the Term Facility were used to redeem the remaining $350 of our September 2021 Notes at a price equal to 102.688% plus accrued and unpaid interest and for general corporate purposes.September 30, 2017, we had no outstanding borrowings under the Revolving Facility but we had utilized $21 for letters of credit. We had availability at September 30, 2017 under the Revolving Facility of $579 after deducting the outstanding letters of credit.At September 30, 2017,March 31, 2024, we were in compliance with the covenants of our financing agreements. Under the Revolving Facility and our senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these types. The incurrence-based covenants in the Revolving Facility permit us to, among other things, (i) issue foreign1.00.1.00, tested at the time of incurrence. We may also make dividend payments in respect of our common stock as well as certain investments and acquisitions subject to a pro forma total net leverage ratio of 2.75:1.00. In addition, the Revolving Facility is subject to a financial covenant requiring us to maintain a first lien net leverage ratio not to exceed 2.00:1.00. The indentures governing the senior notes include other incurrence-based covenants that may subject us to additional specified limitations.We did not repurchase any shares during the first nine months of 2017 under our existing $1,700 common stock share repurchase program. Approximately $219 remains available under the program for future share repurchases. or our common stock through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine (or as may be provided for in the indentures governing the notes), for cash, securities or other consideration. In addition, we may enter into sale-leaseback transactions related to certain of our real estate holdings and factor receivables. There can be no assurance that we will pursue any such transactions in the future, as the pursuit of any alternative will depend upon numerous factors such as market conditions, our financial performance and the limitations applicable to such transactions under our financing and governance documents. Nine Months Ended
September 30, 2017 2016 Cash used for changes in working capital $ (80 ) $ (142 ) Other cash provided by operations 441 324 Net cash provided by operating activities 361 182 Net cash used in investing activities (438 ) (187 ) Net cash used in financing activities (113 ) (72 ) Net decrease in cash and cash equivalents $ (190 ) $ (77 ) above summarizes our consolidated statement of cash flows. $ (251 ) $ (304 ) 149 134 (102 ) (170 ) (63 ) (118 ) 1 255 $ (164 ) $ (33 ) $441$149 in 2024 and $324$134 in 2017 and 2016.2023. The year-over-year increase in other cash provided by operations is primarily attributable to higher operating earnings in 2017. Partially offsetting the stronger earnings performance were increased 2017 payments2024, partially offset by higher year-over-year cash paid for restructuring actions and transaction costs associated with acquisitions.$80$251 and $142$304 in 20172024 and 2016.2023. Cash of $242$169 and $152$270 was used to finance increased receivables in 20172024 and 2016. The higher level of cash required for receivables in 2017 was due primarily to higher year-over-year third-quarter sales.2023, respectively. Cash of $87$18 and $57$104 was used to fund higher inventory levels in 20172024 and 2016. Partially offsetting2023, respectively. Decreases in accounts payable and other net liabilities used cash used for higher receivables and inventoryof $64 in both 2017 and 2016 was cash provided by2024 while increases in accounts payable and other net liabilities provided cash of $249 and $67.$251$70 and $198 in 2017$120 during 2024 and 2016.2023. The $53 increasedecrease in capital expendituresspending during 2024 is primarily due to support launching new business with customers.the year-over-year calendarization of capital spend being lower in this year’s first quarter.2017,2024 and 2023, we had net borrowings of $15 and $270 on our Revolving Facility. During 2024, we paid $106, net of cash acquired, to acquire 80% ownership interests in BFP and BPT and $78 to acquire USM – Warren. Also during 2017, we received the remaining $3 of proceeds related to our 2016 sale of DCLLC. During 2016, we paid $18 to acquire the aftermarket distribution business of Magnum. During 2017 and 2016, purchases of marketable securities were funded by proceeds from sales and maturities of marketable securities.Financing activities — During 2017, DFL completed the issuance of $400 of its April 2025 Notes and paid financing costs of $6 related$25 note payable due to the notes. We paid financing costsformer owners of $3 related to our Term Facility and Revolving Facility and drew the entire $275 available under the Term Facility. We redeemed all $450 of our September 2021 Notes at a $14 premium, repaid indebtedness of a wholly-owned subsidiary in Brazil at a premium of $1 and repaid indebtedness of our BPT and BFP subsidiaries.SME S.p.A. During 2016, DFL completed the issuance of $375 of its June 2026 Notes and paid financing costs of $7 related to the notes. We redeemed all of our February 2021 Notes at a $12 premium and made scheduled repayments of $28 and took out $66 of additional long-term debt at international locations. Also during 2016,2023, we paid financing costs of $3 related$2 to amend ourdomestic revolving facility. credit and guaranty agreement, extending the Revolving Facility maturity to March 14, 2028. We used $26 and $26cash of $15 for dividend payments to common stockholders during both 2024 and 2023. Distributions to noncontrolling interests totaled $3 in 20172024 and 2016. We used $81$1 in 2023. Hydro-Québec made cash contributions to repurchase 6,612,537 common sharesDana TM4 of $9 in 2016.2024 and $10 in 2023. During 2024, we received $11 from Hydro-Québec, which represents deferred purchase consideration associated with their acquisition of a 45% ownership interest in SME S.p.A. from Dana.September 30, 2017March 31, 2024 in our off-balance sheet arrangements from those reported or estimated in the disclosures in Item 7 of our 20162023 Form 10-K.The acquisition of 80% ownership interests Brevini Fluid Power S.p.A. (BFP) and Brevini Power Transmission S.p.A. (BPT) from Brevini Group S.p.A. (Brevini) in February 2017 included the assumption of approximately $293 of liabilities, increasing our contractual obligations at September 30, 2017 versusfrom those reporteddisclosed in Item 7 of our 2016 Form2023 From 10-K. The terms of the related agreement provide Dana the right to call the noncontrolling interests in BFP and BPT held by Brevini, and Brevini the right to put its noncontrolling interests in BFP and BPT to Dana, assuming Dana does not exercise its call rights, at dates and prices defined in the agreement. The redemption value of the redeemable noncontrolling interests in BFP and BPT was $47 at September 30, 2017. In connection with the acquisition of BFP and BPT, Dana agreed to purchase certain real estate currently being leased by BPT from a Brevini affiliate for €25. See Notes 2 and 7 to our consolidated financial statements in Item 1 of Part I for additional information.The issuance of $400 of April 2025 Notes in early April 2017 and the subsequent use of the related proceeds to repay indebtedness extended the maturities on nearly $400 of indebtedness at significantly lower interest rates. In September 2017, we redeemed the remaining $350 of our September 2021 Notes using available cash and proceeds from our $275 Term Facility. See Note 12 to our consolidated financial statements in Item 1 of Part I for additional information.As discussed below under Critical Accounting Estimates, an additional contribution in connection with the termination of a U.S. defined benefit pension plan may occur in the first half of 2019.1413 to our consolidated financial statements in Item 1 of Part I. WeBased on information available to us at the present time, we do not believe that any liabilities beyond the amounts already accrued that may result from these contingencies will not have a material adverse effect on our liquidity, financial condition or results of operations.There have been no material changesSee Item 7 in the applicationour 2023 Form 10-K for a description of our significant accounting policies or critical accounting estimates. Our significant accounting policies are described in Note 1 to our consolidated financial statements in Item 1 of Part I, as well as inestimates and Note 1 to our consolidated financial statements in Item 8 of our 20162023 Form 10-K. Our10-K for our significant accounting policies. There were no changes to our critical accounting estimates are described in Item 7 of our 2016 Form 10-K.Pension Plans – Long-term interest rates on high quality corporate debt instruments, which are used to determine the discount rates used in the valuationthree months ended March 31, 2024. See Note 1 to our consolidated financial statements in this Form 10-Q for a discussion of our defined benefit pension obligations, have decreased during 2017. The lower interest rates, if unchangednew accounting guidance adopted during the fourth quarter, would result in a year-end discount rate of 3.62% for our U.S. plans versus the 3.92% discount rate used at the end of 2016. Our return on pension assets through the first ninethree months of 2017 has been better than our 6.0% annual expected return on plan assets. Notwithstanding other changes in assumptions, including those noted below, we would expect using a discount rate of 3.62% and earning a 6.0% annualized return on plan assets during the fourth quarter to result in an immaterial actuarial gain for the U.S. defined benefit plans at December 31, 2017.2024.In October 2017, the Dana Board of Directors authorized the company to pursue termination of one of its U.S. defined benefit pension plans. Ultimate plan termination is subject to prevailing market conditions and other considerations, including interest rates and annuity pricing. In the event the company proceeds with effectuating termination, subject to regulatory approval, settlement of the plan obligations is expected to occur in the first half of 2019. Based on current interest rate levels and asset valuations, the benefit obligations and associated assets of the plan being terminated approximates $1,020 and $910, respectively. When measuring the benefit obligations of this plan at the end of 2017, we expect to use assumptions that reflect the manner in which the liabilities are expected to be settled, including assumptions around whether liabilities will be settled through lump sum payments or purchase of annuities and the cost to purchase annuities. Application of these plan terminationassumptions is currently expected to increase the plan's benefit obligation by and result in an actuarial loss of approximately $65. Assuming plan assets are unchanged from current levels and settlement occurred at the adjusted liability at December 31, 2017, a cash contribution approximating $175 would be required. The ultimate cash contribution required to effect settlement of the obligations in the first half of 2019 will depend on the actual manner of settlement selected by participants, the prevailing cost of annuities at that time and plan asset returns prior to settlement. Using assumptions based on current market rates and manner of settlement experience and assuming existing asset levels, we estimate the pre-tax deferred actuarial loss in accumulated other comprehensive income that will be recognized as expense at time of settlement would be in the range of $330 to $415.Considering the impacts described above, the funded status of our defined benefit pension plans in the U.S. at the end of 2017 would approximate 86%, comparable to the funded position at the end of 2016. We currently expect there to be no minimum funding requirements for our U.S. plans in 2018.During the third quarter of 2017, we entered into an amended credit and guaranty agreement comprised of a $275 term facility (the Term Facility) and a $600 revolving credit facility (the Revolving Facility) both of which mature on August 17, 2022. On September 14, 2017, we drew the entire amount available under the Term Facility. The proceeds from the Term Facility were used to redeem the remainder of our September 2021 Notes and for general corporate purposes. The Revolving Facility amended our previous revolving credit facility. Advances under the Term Facility and the Revolving Facility bear interest at a floating rate based on, at our option, the base rate or Eurodollar rate (each as described in the revolving credit agreement) plus a margin.During the second quarter of 2017, we issued $400 of April 2025 Notes through a wholly-owned subsidiary, DFL. In conjunction with the issuance, we executed fixed-to-fixed cross-currency swaps with the same critical terms as the April 2025 Notes. We used the $394 of proceeds from the April 2025 Notes to repay a portion of the indebtedness of BFP and BPT, to repay indebtedness of a subsidiary in Brazil and to redeem $100 of our September 2021 Notes.See Notes 12 and 13 to our consolidated financial statements in Item 1 of Part I for additional information.Other than the refinancing activities described above, there20162023 Form 10-K.September 30, 2017March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. During the quarter ended March 31, 2017, we acquired Warren Manufacturing LLC (USM – Warren) and 80% ownership interests in Brevini Fluid Power S.p.A. (BFP) and Brevini Power Transmission S.p.A. (BPT) and are currently integrating USM – Warren, BFP and BPT into our operations, compliance programs and internal control processes. As permitted by SEC guidance, management intends to exclude USM – Warren, BFP and BPT from its assessment of internal controls over financial reporting as of December 31, 2017.20162023 Form 10-K for a more complete understanding of the matters covered by the certifications.1413 to our consolidated financial statements in Item 1 of Part I of this Form 10-Q.1A. 1A. Risk Factors20162023 Form 10-K. Our $1,700 Board of Directors approved common stock share repurchase program expires on December 31, 2017. We repurchase shares utilizing available excess cash either in the open market or through privately negotiated transactions. The stock repurchases are subject to prevailing market conditions and other considerations. No shares of our common stock have beenwere repurchased underduring the program since the secondfirst quarter of 2016. Approximately $219 remained available under2024.programthree months ended March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for future share repurchases asthe purchase or sale of September 30, 2017. 3.13.23.310.131.1September 30, 2017,March 31, 2024, formatted in XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statement of Operations, (ii) the Consolidated Statement of Comprehensive Income, (iii) the Consolidated Balance Sheet, (iv) the Consolidated Statement of Cash Flows and (v) Notes to the Consolidated Financial Statements. Filed with this Report.Date:October 26, 2017By: /s/ Jonathan M. Collins Jonathan M. Collins Executive54